Oral Answers to Questions

EDUCATION AND SKILLS

The Secretary of State was asked—

Access Regulator

David Cameron: What representations he has received on the role of the access regulator; and if he will make a statement.

Charles Clarke: I have received a range of responses and comments since the publication of our White Paper "The Future of Higher Education." We will shortly be publishing detailed proposals for consultation, and I will look with interest to see what the comments are.

David Cameron: Could the Secretary of State tell us why there was so little detail on the access regulator in the White Paper, and why we have had to rely on press leaks about it? Is it not the case that there are two views? The first is led by the Chancellor, who thinks that the access regulator should involve himself in every university and look at details of family income, postcode and parents' education. The second is that of the Prime Minister, who thinks the whole thing an expensive waste of money. I agree with the Prime Minister—what does the Secretary of State think?

Charles Clarke: You will be glad to know, Mr. Speaker, that there are many more than two views on this interesting question. If the hon. Gentleman talks to vice-chancellors, as I do, he will find a very wide range of points of view. Many of them accept completely the purpose of and need for the access regulator, because they acknowledge that the record of British universities in terms of access for children from working-class homes is absolutely unacceptable. However, we will publish our detailed proposals precisely in order that we can establish the responses and comments, and take account of them in detail.

Alan Howarth: Does my right hon. Friend agree that a particularly absurd point of view is to say that it is an assault on academic freedom if the Government, on behalf of the taxpayer, decline to endorse admissions policies and practices that are socially exclusive, or, equally, to argue that it is an assault on academic freedom if the Government refuse to subvent research that is not of international quality?

Charles Clarke: I strongly agree with my right hon. Friend, and given his experience of the higher education world, he is aware that many people within it know that it is a disgrace that those from working-class homes do not have better access to universities. They recognise that, as the Government fund the universities, we are entitled to express our determination to make this historic change, and that is what we are going to do.

Tim Boswell: The Secretary of State really must make up his mind as to whether he wants to base admission on merit, or to persist in his remarkable assertion today that the situation in some universities is absolutely unacceptable. When will he come to terms with the fact that neither he nor—more modestly—I, nor any politician, is half as well placed to promote the access of talented people of all social backgrounds to university as the universities themselves? Does he not understand that this proposed regulator, who represents the biggest ever sop to the Treasury's obsession with social engineering, will at best prove ineffectual—as he undoubtedly hopes—and at worst will interfere with cherished academic freedoms?

Charles Clarke: What I do agree with is the proposition that universities have to address this question, and I also agree that many are doing so very effectively; indeed, in a statement to this House I mentioned Sheffield, Liverpool and others. However, the hon. Gentleman should accept that too many universities do not address this question effectively, and we need this form of regulator to ensure that they do so.
	I should remind the House that very many of those from less conventional academic backgrounds who have gone to university have in fact performed much better than some of those from more conventional academic backgrounds. So the purpose of the admissions process is to recognise merit and attainment, as the hon. Gentleman says, but also to recognise and foster potential, because that is what it is all about.

Mark Lazarowicz: Does my right hon. Friend accept that, although his proposals will apply to England and Wales, they will also have implications for Scotland? In addition to the fact that many would-be students from Scotland go to English universities, Scottish universities will have to take on board the effects of the proposals. Can my right hon. Friend give the House an assurance that, during his consultation, he will take account of the views expressed by individuals, academic bodies and Scottish Ministers before taking his final decision on the matter?

Charles Clarke: I am very happy to give my hon. Friend that specific assurance; indeed, I regularly meet my right hon. Friend the Secretary of State for Scotland and the relevant members of the Scottish Executive to discuss precisely the points that my hon. Friend raises. One of the joys of devolution is that our different countries can establish different systems, but I acknowledge that within that it is important to have good dialogue and understanding of the way we work together, and of the implications of decisions taken in one part of the UK for those taken in other parts.

Paul Holmes: Can the Secretary of State explain to the House the point of establishing an access regulator whose purpose is to get more children from working-class backgrounds into elite universities, when at the same time they are being deterred through the imposition of differential fees of £9,000?

Charles Clarke: On the purely financial question, we are encouraging people by removing the upfront fee of £1,100 a year, and by providing, for the first time in years, proper levels of maintenance and grant support while people are studying. Those are positive incentives. However, if the hon. Gentleman is suggesting that in seeking to promote access we concentrate only on finance, and ignore the quality of schools in working-class areas or the record of universities in terms of networking and admissions procedures, I do not accept his point. We certainly have to look at finance, but we must also improve education in working-class areas through measures such as those proposed by my hon. Friend the Member for South Shields (Mr. Miliband). We must also address the performance of universities through our access regulator, which is what we are doing.

Jeff Ennis: Does my right hon. Friend envisage that the role of the access regulator will involve the setting of individual targets for universities in widening access?

Charles Clarke: I envisage that the access regulator would require each university to have in place a process that includes the setting of its own targets against which it can be monitored. That is the right way to approach it. I do not myself think—although I emphasise that it will be a matter for consultation through the process that I described—that a central individual organisation saying that X, Y or Z is a specific target for a specific university is the right way to go. It is absolutely right, however, for universities to have their own target-setting regimes that aim for improvement and for the access regulator to ensure that that is followed through.

Boris Johnson: rose—[Interruption.]

Mr. Speaker: Order.

Boris Johnson: Thank you, Mr. Speaker.
	May I ask the Secretary of State whether he envisaged any social objective when he said the other day that he would not mind in the least if classics were to decline as a subject that is studied at school and in universities? Was not that a sad and surprising thing for a man who is supposed to be encouraging scholarship and learning to say?

Charles Clarke: The hon. Gentleman is more of an expert on social matters than I. In fact, in the interview to which he refers, which was with The Sunday Times, I praised the study of philosophy in schools and in universities. The journalist then asked me what I felt about classics. I shrugged my shoulders and said that I was not so sure about that. I am happy to have the opportunity to make my position clear, because it has been widely misrepresented. I am in favour of the study of classics, I am in favour of studying languages and I am in favour of studying the ancient civilisations. [Interruption.] Yes, including the Tories. However, I do not accept the argument advanced by some advocates of classics that the best way to learn French is to learn Latin. We should study classics on its own merits—it is an important academic study which I support.

Further Education

Ross Cranston: If he will make a statement on unit funding in further education colleges.

Ivan Lewis: In November we announced the largest ever investment in further education to support a radical and ambitious reform strategy that links funding to college performance. That will increase planned funding per full-time equivalent student from £4,040 in 2002–03 to £4,650 by 2005–06—a real-terms increase of 7 per cent.

Ross Cranston: That is very good news and I welcome it unreservedly. Dudley college—an excellent college—has told me about a pressure point this year related to the lower settlement for college lecturers. The historic gap in pay between school teachers and college lecturers makes it difficult for Dudley to recruit good lecturers. Can my hon. Friend give me some assurances on that?

Ivan Lewis: I can give my hon. and learned Friend those assurances. This settlement is widely accepted by the Association of Colleges and the relevant trade unions as a significant level of investment that will allow the gap between the pay of teachers in schools and the pay of lecturers in colleges to narrow significantly during the next three years. That is very important in terms of the status of further education. It is central to achieving our 14-to-19 objectives and our basic skill objectives, to work force development, to attaining higher-level skills and, increasingly, to access to higher education. We urge the employers and the unions, now that the money has been made available, to come to a sensible negotiated settlement and to get on with the job of delivering reform in the sector.

Tony Baldry: There is genuine excitement in my constituency as a consequence of the reorganisation of colleges in Oxfordshire. For the first time, Bicester will have a further education campus, which is very good news for the town. The Minister said that the gap in pay will narrow significantly in the next three years. When does he expect college lecturers to get back to parity with teachers in schools—back to where they started a few years ago? When will that gap close?

Ivan Lewis: I am delighted that the hon. Gentleman is so excited, and I am convinced that he will inform his constituents that this happened under a Labour Government. I remind him that it was his party that devolved power to individual colleges to negotiate with trade unions at a local level on terms and conditions of incorporation. We have no intention of interfering in those arrangements, but everybody, including the employers and the unions, accepts that this is a real opportunity significantly to narrow the pay gap.

Derek Foster: There are more young people aged between 16 and 19 in further education colleges than in schools, and more adults in FE colleges than in universities. Are not FE colleges therefore right at the heart of the lifelong learning strategy, and are they not crucial to widening participation? Will my hon. Friend make certain that further education is given the crucial place in the Government's strategy that it deserves?

Ivan Lewis: I agree entirely with my right hon. Friend, and that is one reason why it has been accepted that the reform and investment programme has finally removed the "cinderella" tag from the FE sector. The programme has stopped the sector feeling undervalued and under-resourced, and that it has not been prioritised over many years under successive Governments. We need to move away from the victim culture to a can-do culture. The sector is essential to ensuring that young people, often from disadvantaged communities, have access to progression and success in the education system, and the capacity to go on to university.
	It is worth saying that the package of resources practically eliminates the unit funding gap between the funding that is available for 16 to 19-year-olds being educated in schools and for those being educated in colleges. It brings an equity to the previous disparity.

School Exclusions

Chris Grayling: If he will make a statement on his policy on exclusions from schools.

Ivan Lewis: We are committed to backing head teachers' authority when pupils' behaviour warrants exclusion. Local education authorities need to ensure that excluded pupils continue to receive full-time education, and we are investing some £470 million in a national behaviour and attendance strategy to help schools tackle deteriorating behaviour at an early stage.

Chris Grayling: I read with interest the speech by the Secretary of State on 12 December last year. One of the biggest complaints of the governing body involved in a recent case in my constituency was that it had no advice or representation when it went into the appeals process, whereas the parents against whom it came up had publicly funded advice and representation. The Secretary of State's speech made no attempt to redress that potential imbalance. Will the Department look again at the matter, and come back with new proposals?

Ivan Lewis: We have significantly reformed the appeals panel process to take account of the genuine concerns expressed by Members such as the hon. Gentleman. The appeals panel process has been changed in a number of ways. From now on, there will be a head teacher and a governor on every panel, decisions will not be overturned on technicalities, and the needs of the whole school must be balanced with the needs of individual pupils. In addition, if a panel finds that an exclusion was not technically justified, it will not necessarily have to instruct that the pupil involved be reinstated, because of the effect that that would have on the school generally. However, if there is a feeling that local education authorities or schools are not being represented appropriately at appeal panel hearings, we would be willing to consider that.

Jonathan R Shaw: Yesterday's Ofsted report highlighted pupil behaviour as an obstacle to improving schools' educational standards. I recently visited a school in my constituency with a pupil referral unit on its campus. Pupils and students saw that the unit was working, and had a clear understanding of the programme. Students and staff said that the big difference was that that unit simply did not exist a year earlier. If we are to tackle pupil behaviour, is it not important that we get the resources into schools?

Ivan Lewis: I agree entirely with my hon. Friend. We must back head teachers and teachers who have to make difficult decisions and who feel obliged to exclude students as a last resort. However, we must also do something that did not happen for 20 years—invest in preventive work to ensure that exclusion does not become an inevitability for far too many young people. For example, we have learning support units in schools that allow head teachers to withdraw pupils from classes but also to keep them in school so that they can be reintegrated into classes. We have key workers who provide a more individualised support for young people. We will have an emphasis on training teachers in the management of discipline and behaviours. We are focusing on the early years of secondary school when, traditionally, far too many young people have gone backwards in performance terms and been lost to learning as a consequence. We have also introduced proposals for a more flexible 14 to 19 curriculum.
	As my hon. Friend says, from now on we will not merely exclude young people permanently: we will insist that they have access to a full-time, high-quality education so that we can reintegrate them into the mainstream and stop them drifting into a life of antisocial behaviour and crime.

Roy Beggs: Does the Minister agree that exclusion is the least satisfactory sanction and that school principals should use it only as a last resort? Does he also agree that to make provision other than at school for disruptive, unruly and aggressive pupils is very expensive? What consideration has been given to helping all schools to deal individually with difficult children by providing additional non-teaching time for senior teachers so that they can deal with the problems on their own school campuses?

Ivan Lewis: This Government have put an unprecedented number of adults into schools, in addition to teachers, to help teachers to ensure that challenging young people are offered an individually tailored programme of support, which considers not only their educational needs but their home life and family relationships; for example, we have learning mentors and we have developed the Connexions service, which provides personal advisers. Increasingly, we also recognise that, for their continuous professional development, teachers need support for the management of discipline and behaviour problems. My hon. Friend the Minister for School Standards has concluded a ground-breaking agreement with the unions on the reform of the work force in the teaching profession, which will ensure that we make the best use of all the adults who contribute to the school community and that we allow senior staff to deploy their resources and skills more effectively.

Brian Iddon: Bearing in mind the fact that parents can be taken to court for allowing their children to truant, who is responsible for monitoring the length of time of an exclusion; and when does that period become unacceptable?

Ivan Lewis: It is the duty of the educational welfare service and the local education authority to monitor whether exclusions are applied appropriately. In the past, one of the failings of the system was that neither fixed-term nor permanent exclusion was followed by decisive action to reintegrate and support the pupil and tackle the problems. However, we now have a commitment to full-time education for those who are permanently excluded, and that will make a real difference. Furthermore, for fixed-term—but not permanent—exclusions in schools in 34 LEA areas, we are insisting that from day one children will have access to proper education and that there will be a proper focus on their needs, so that they will not simply be left excluded to drift into further behaviour problems and social decline.

Teachers (London)

John Randall: What recent assessment he has made of teacher recruitment and retention in London; and if he will make a statement.

Stephen Twigg: The teacher vacancy rate in London fell from 3.5 per cent. in 2001 to 2.7 per cent. in 2002. There are now more than 60,000 full-time equivalent teachers in London, a 6 per cent. increase since 1997. However, I acknowledge that many schools continue to face difficulties and we are taking measures to further improve the long-term position.

John Randall: I am grateful for the Minister's acknowledgement that the problem is becoming serious, because it undermines the efforts of staff and pupils to improve standards. Can he confirm that the funding available through the standards fund for recruitment and retention will not be renewed? Are there any plans to do something constructive about that?

Stephen Twigg: I thank the hon. Gentleman for his acknowledgement that we are taking the problem seriously. The situation is by no means a new one. We have decided to ensure that money goes directly to schools through local education authorities. The hon. Gentleman's authority received a good settlement under the recent local government settlement, which includes schools, and a significant number of schools in his constituency will benefit from our new leadership incentive grant. Many of the problems of recruitment and retention that we need to tackle in London relate to housing costs, and we are working closely with the Office of the Deputy Prime Minister to consider schemes that will build on the success of the starter homes initiative to attract more teachers into London and, perhaps more importantly, to keep more teachers teaching in London.

Barry Sheerman: Does my hon. Friend agree that if recruitment and retention issues in London and elsewhere are to be met, we must carefully consider yesterday's Ofsted report—especially in regard to schools in challenging circumstances? I hope that my hon. Friend and the whole education team will examine the challenges faced by teachers in London. As behaviour, attendance and exclusion problems impact greatly on recruitment and retention, will my hon. Friend carefully consider David Bell's excellent report and learn its lessons quickly?

Stephen Twigg: I am grateful to my hon. Friend and agree that the excellent Ofsted report provides a great deal to consider. The issues around behaviour and attendance clearly apply throughout the country but I have no doubt that they are especially pronounced in some London communities. There is every indication that pupil behaviour is a much bigger factor in teacher retention in London than in other parts of the country—which is why our behaviour strategy focuses especially on London and other urban areas.

Vincent Cable: As I represent a south-west London constituency where teachers cannot remotely afford to live without a well-paid partner, can the Minister say how many key worker affordable homes have been made available to teachers, and how many the new initiative will make available in the next year or so?

Stephen Twigg: I will write to the hon. Gentleman with the precise figure. The starter homes initiative, which is aimed at public servants across the board, has been taken up by teachers more than any other category. I am sure that the hon. Gentleman shares my concern about teachers who are already in the profession, who want to settle into a family rather than a starter home. We are working with the Office of the Deputy Prime Minister on proposals for meeting that need.

Higher Education

Andrew Lansley: When he last met Universities UK to discuss the funding of higher education; and if he will make a statement.

Charles Clarke: I frequently meet representatives of Universities UK formally and informally. I have been glad to inform them that the comprehensive spending review gave an increase in university funding of 6 per cent. a year in real terms.

Andrew Lansley: I am disappointed that the Secretary of State did not say that he had met Universities UK representatives this week to discuss its report on student debt, which states:
	"Debt aversion deterred entry into higher education, especially for the very groups the government most wants to attract."
	It said also that
	"a key criticism of the White Paper voiced to date is the potential impact of variable fees".
	In light of that report, does not the Secretary of State consider it important to think again about the imposition of substantial long-term debt on students? Or does he share the view of his ministerial colleague, the hon. Member for Barking (Margaret Hodge), who said that only rich kids go to Oxford or Cambridge—which is both misleading and damaging?

Charles Clarke: As I told the House when I made a statement on the White Paper, if the decision were taken to get rid of upfront fees of £1,100 a year in favour of repayment through the tax system, the debt would increase by £3,300—but payment through the tax system would be on an income-contingent basis with a zero real rate of return. I acknowledge also that debt can be inhibiting, but one has to set that against the inhibition of an upfront fee of £1,100; no support in the form of grants and fee remissions; and a repayment system that does not reflect income. I shall carefully study the Universities UK report, but the overall balance of our proposals is positive for access.

Diane Abbott: The Secretary of State will be aware that I was a child from a working-class background who went to Cambridge university, when no other member of my family stayed at school beyond the age of 14. Does my right hon. Friend realise that for such families, the prospect of debt and a differential fee for attending a university such as Cambridge will act as a serious disincentive?

Charles Clarke: I accept, as I have told the House on many occasions, that we need to take the disincentive effect into account. However, it is important that people contribute. My hon. Friend is an example of someone with a university education securing a well paid career throughout life. She would have to decide the form that her contribution took. In my opinion, if one achieves a good degree and earns on average 50 per cent. more than people without degrees, that should be taken into account in the funding system. Those who have questions to raise should discuss that aspect.

Phil Willis: On 9 January, at Education questions, the hon. Member for Isle of Wight (Mr. Turner) rightly asked the Minister for Lifelong Learning and Higher Education what the funding gap was between what the Government thought universities needed and what, in fact, the universities were receiving. Can we have an answer to that question today? Will the Secretary of State explain why he said in his statement that there would be a 26 per cent. increase in funding for teaching and learning, yet in the three years of the comprehensive spending review, the actual funding rises are 3.1, 0.66 and 2.89 per cent.? In reality, excluding the Government's initiatives, which are targeted at certain universities, there will be a cut in real-terms funding for the vast majority of our universities, so recruitment and retention and, indeed, support for students will, in fact, decline.

Charles Clarke: Two things arise. I have nothing to add to what my hon. Friend the Minister of State said on the funding gap at Question Time in January, because there are many claims about what the funding gap is. Universities UK has produced an estimate; other academic estimates have been made. What I say is very simple: we have to increase spending, and that is what we are doing. Indeed, there will be no cut in real terms for any university, contrary to what the hon. Gentleman suggests. We are putting in more money—6 per cent. a year in real terms is the most significant settlement for higher education for decades. That will make a real difference to every university, with the focus on teaching and knowledge transfer, and I would have hoped that the hon. Gentleman would welcome that, rather than publishing his own batty schemes, designed to force children to live at home when they go to university.

Anne Campbell: I welcome the extra £2.2 billion announced in the higher education White Paper—it will obviously go a long way to ensure that those universities that are underfunded do better in future—but may I suggest to my right hon. Friend that all universities are feeling the pinch? Would it not be better to raise tuition fees generally across the board, rather than to allow some universities to charge differential fees?

Charles Clarke: I understand the point that my hon. Friend makes. We have discussed it outside the Chamber on several occasions. First, I appreciate her thanks for the resources that are going in. It is important that she acknowledges that, and I am grateful to her for the fact that she has. Secondly, I am grateful to her for acknowledging that still more money is needed through the fees system from students themselves. That is an important comment as well. Whether that is done by a standard fee increase across the whole range or by variable fees, as we suggest, is a question for debate—there are many views on this—but I believe that we should acknowledge that we now have a multi-tier university system, with differing impacts on possible earnings from the various universities, and that it is reasonable for the fees system to reflect that. However, I am sure that my hon. Friend and I will continue to debate that, both in public and in private.

Damian Green: The Secretary of State is making much of the funding increases under this Government. Will he tell the House what the funding per student is?

Charles Clarke: I cannot tell the hon. Gentleman the figure that he asks for, although I am happy to write it down and send it to him if he wants to know; but what I can say is that, throughout the whole period of the Conservative Government, funding per student was in absolute freefall until 1997. In 1997, we put in the money to flatten that out, so that it did not continue going down. As we set out in the White Paper—I am sure that he has a copy in front of him—we need to start raising it so that funding per student increases. That is why we have a 6 per cent. a year real increase in funding, and we are considering raising more money from fees precisely to address the massive disinvestments that the Conservative Government created.

Damian Green: Let me enlighten the Secretary of State about what has happened under this Government, based on a letter that the Minister for Lifelong Learning and Higher Education sent to me on 7 December. What they inherited in 1997 was funding per student in real terms of £5,060. This year, after six years of Labour Government, the figure is £4,900—a Labour cut of £160 for every full-time student. This Government have been taxing more and spending more, but the money is not getting through to where it matters: the education of our students. Does not he agree that that sums up the whole new Labour failure on education?

Charles Clarke: It will not surprise the hon. Gentleman to hear that I do not agree with him. If he considers the years from 1979 to 1997, he will see an absolutely dramatic fall in funding per student. That is set out clearly in a graph in the White Paper. Since 1997, that fall has been flattened out. We are now putting in the money to increase the level of funding. That is what we intend to do.

Ian Lucas: I am organising a conference on the higher education White Paper at my local university college at the North East Wales institute of higher education in Wrexham. My right hon. Friend is very welcome to attend, but can he help me by telling me whether the White Paper applies to England and Wales?

Charles Clarke: The White Paper indeed applies to England and Wales. However, in England and Wales, the regimes for student funding and control of universities are different. As my hon. Friend knows, an issue that has been discussed—and I referred to this in my statement on the higher education White Paper—is that student funding is not devolved whereas universities are devolved. We should consider that issue. I look forward with great interest to the outcome of the conference that my hon. Friend is organising. I will be interested to hear its conclusions on this important policy question.

Sponsored Scholarships

Anthony Steen: How many Government-sponsored scholarships there are for students studying for university degrees in England.

Charles Clarke: A range of scholarships, bursaries and grants is available, including opportunity bursaries, the disabled students allowance and the child care grant. In addition, many universities offer their own scholarships, or administer those of private benefactors. However, that information is not held centrally.

Anthony Steen: How can the Secretary of State and the Government justify spending millions of pounds funding three-year Mickey Mouse degrees such as golf course studies and surf sciences, when the money could provide bursaries to allow bright students from poorer backgrounds to study rigorous academic degrees and not face record levels of debt?

Charles Clarke: I agree that it is necessary to put more money into bursaries of the kind that the hon. Gentleman suggests, and we are discussing precisely that issue with universities. However, if the implication of the hon. Gentleman's question is that we should abandon the target of having 50 per cent. going into higher education by the end of the decade, I would not agree with him. It is important that we acknowledge that the future of this country depends on having a highly educated and highly qualified population, able to deal with the economic and social challenges of the future. That is what our competitor countries are doing, and that is what we have to do.

Llew Smith: Will the Secretary of State explain how we can find billions of pounds to increase our defence budget and go to war with Iraq, but cannot find the moneys to scrap tuition fees?

Charles Clarke: As my hon. Friend knows, all Governments deal with the conflicting priorities of government—both within education and between education, defence and other areas. Universities are not well placed to compete against, for example, nurseries, primary schools, secondary schools and other areas. That is why we have to encourage universities to develop their own independent sources of finances.

Modern Languages

Tony Cunningham: What recent steps he has taken to improve the teaching of modern languages in schools.

David Miliband: The national languages strategy sets out a key objective of improving the teaching and learning of languages, particularly in secondary schools but also in primary schools. We want language learning to be available and exciting, and we are developing the key stage 3 strategy to achieve that goal.

Tony Cunningham: My hon. Friend will be aware that I have some superb specialist schools in my constituency. I hope that, in the near future, I will have quite a few more. What role does the Minister see for specialist schools in improving language teaching in our secondary schools?

David Miliband: My hon. Friend raises an important point. There are now 157 language colleges around the country. They are centres of excellence for the teaching of languages. I hope that the excellent practice that they develop can be spread out across the system.

Henry Bellingham: Is the Minister aware of a school in my constituency where a pupil was permanently excluded for breaking into a language class and doing £2,000 of damage? That obviously had a profound impact on the teaching of languages in the school. The governor supported the exclusion but unfortunately, on appeal, it was overturned. Will the Minister consider this particular case if I write to him? Does he not agree that head teachers, chairmen and governors should not have their power to exclude overruled by an appeal panel?

David Miliband: rose—

Mr. Speaker: Order. The Minister should not answer that question.

Education (Stockport)

Ann Coffey: What representations he has received about the increased spending on education in Stockport.

Stephen Twigg: Since the provisional settlement for 2003–04 was announced on 5 December, we have received no representations about the increased spending on education in Stockport. In 2003–04, Stockport's education formula spending share is increasing by 6.1 per cent. on a per pupil basis. After taking account of pupil number changes, the increase in its education assessment is 7.2 per cent. Both figures are above the national average.

Ann Coffey: I thank my hon. Friend for that reply. As he says, it is a very good settlement. He may recall that, in a letter sent to his Department in September last year signed by the leader of the council and local Members of Parliament, Stockport asked for a specific grant of £1 million, because Ofsted had identified the funding available to the authority as very poor and insufficient to provide effective support to schools. Does he therefore share my astonishment that the Liberal Democrat council is proposing to passport only a small proportion of the £1.3 million increase in the local education authority block grant? Will he make it clear to the council that that money was given by the Government to meet educational need in the borough and should be spent on education?

Stephen Twigg: All of us are used to the fact that the Liberal Democrats will say one thing in this place and do something very different at the local level. I pay tribute to my hon. Friend for the hard work that she undertook with her local authority to secure such a good settlement. It would be a great pity if the extra money that is going to education in Stockport were not fully spent, so that full support can be given to schools as the local council asked for.

Graham Allen: rose—

Mr. Speaker: Order. Stockport is a long way from the hon. Gentleman's constituency.

A2 and AS-levels

Peter Luff: What steps he has taken to ascertain whether the necessary re-marking of A2 and AS-level scripts from last summer's examinations has been completed.

David Miliband: Following the investigation into the setting of the 2002 grade boundaries, the outcome of Mike Tomlinson's regrading exercise was announced on 15 October. I understand that the awarding bodies are due to complete appeals from schools and colleges against the grades for individual candidates by 14 March. If the head of the examination centre is dissatisfied once the awarding body appeals procedures have been exhausted, he or she may appeal to the Examinations Appeals Board on the candidate's behalf.

Peter Luff: The date of 14 March is just too late. I know of a case in Worcestershire in which the re-marking last summer of two specimen papers revealed that a much larger group of pupils had had their AS-level grades significantly depressed, and wrongly so. However, despite forceful requests from the school, the board has still not completed that re-marking. I do not believe that this case is unique, and the Minister's comments suggest that it is not unique. Does he understand that this understating of achievement, as a result of either the attempt to manipulate grades to meet political objectives or of simple incompetence, has had a serious impact on the applications of the young people involved to the universities of their choice? That could seriously damage their future careers.

David Miliband: I certainly agree with the hon. Gentleman that this was a very serious issue last summer. We take it extremely seriously. The deadline of 14 March is one month later than the deadline that has existed in every previous year, and it reflects the problems that existed last August and September. Notwithstanding that, I think that he will find that awarding bodies are making strenuous efforts to ensure that the grades are right for every individual pupil.

Graham Brady: The Minister wrote to me a few days ago confirming that there are remaining concerns about the standards of marking of the OCR scripts in certain subjects, namely English literature, history and psychology. That potentially affects 25,000 exam entries. Will he accept that it is unacceptable that, six months later, thousands of students do not know whether the marking of their exams was accurate? Will he now make a statement on the inquiry being mounted by the Qualifications and Curriculum Authority and on what he expects it to uncover?

David Miliband: It is important that I put on record the facts of the matter. I have written two recent letters to the hon. Gentleman. One concerned scripts in OCR psychology examinations. The letter was about a particular subject that affected a school in the constituency of a Conservative Member who is not present at the moment. Both he and the hon. Gentleman have asked me about that.
	The hon. Gentleman also asked me when the scripts for all subjects would be destroyed, and I explained to him in the second letter that, in the three subjects that he mentioned, all the scripts would be kept for the moment. The grades in those subjects are not somehow dubious or under review, but the scripts are being kept in case further questions are raised about them in the future. The results are not dubious. I suggest that he joins the consensus, stretching from the Secondary Heads Association to the Headmasters and Headmistresses Conference, that Mike Tomlinson's inquiry has given a clear guarantee to students that their grades are correct. The hon. Gentleman should join that consensus and not seek to undermine it.

Specialist Colleges

Andrew Selous: If he will make a statement on the private funds required for a specialist college bid to proceed.

David Miliband: Sponsorship continues to be an important element of the specialist schools programme. Applicant specialist schools must raise £50,000 in sponsorship from the private sector. An applicant specialist school's involvement in raising sponsorship will help them develop valuable relationships. As the hon. Gentleman knows, a new partnership fund announced by my right hon. Friend the Secretary of State a few weeks ago will help bridge the sponsorship gap for schools in areas of economic disadvantage.

Andrew Selous: I thank the Minister for that reply. Will he consider the introduction of much more flexibility in the requirement for schools to raise £50,000 of funds? He will understand that it is extremely dispiriting for a school that is perhaps only a few thousand pounds short of that target to face the prospect of losing a £500,000 grant, as was the case with Vandyke upper school in my constituency. Will he consider extending the time scale within which the school would have to raise that £50,000 during the first four years of funding?

David Miliband: The hon. Gentleman will know that two schools in his constituency have managed to raise sufficient funds: Northfields upper school, and Queensbury school, both of which are in Dunstable. The flexibility for which he asks was announced by my right hon. Friend the Secretary of State: that is precisely the purpose of the partnership fund when the school has real problems in raising sponsorship, whether because of economic disadvantage or because other schools have reached companies in that area first. We will give serious consideration to those matters. The flexibility for which he asks is now in the system.

Graham Allen: Will my hon. Friend consider the use of private funds and sponsorship to ensure that people are placed in work placements in the middle of their degree course? Given concerns about the separation between the worlds of work and education, that is one way to unite the two. In addition, given concerns about top-up fees and debt, it is one way in which an individual can pay off debt and enjoy work experience while undertaking their degree.

David Miliband: My hon. Friend tempts me to venture into areas that are somewhat beyond my immediate responsibility. The sort of liaison and linkage to which he refers between schools, colleges and workplaces is at the centre of our 14 to 19 strategy, and all those links will be supported by Members across the House, as they are in the interests of young people and the country.

School Repairs (Wandsworth)

Tom Cox: What Government funding has been made available to the London borough of Wandsworth towards the cost of repair and refurbishment of schools within the borough in each of the last five years.

Stephen Twigg: Over the last five years, the London borough of Wandsworth and schools in that borough, including those in the voluntary aided sector, have been allocated more than £28 million for the repair and refurbishment of school premises. A further £2.9 million was provided in that period for new pupil places.

Tom Cox: I thank my right hon. Friend very much for that reply, which will be welcomed by my two parliamentary colleagues who also represent the London borough of Wandsworth. Is he aware that that will ensure that the public living in the borough of Wandsworth understand the Government's commitment to the whole range of education services in that borough, despite the ongoing, misleading and distorting statements that are issued by the Tory-controlled local authority about our education policies?

Stephen Twigg: I am grateful to my hon. Friend, particularly for promoting me to the Privy Council in his opening remarks, and I pay tribute to him and his two colleagues for their hard work on behalf of their constituents in Wandsworth. The capital funding made available to Wandsworth in 1996–97 was £1.5 million. In the current financial year, it is more than £12 million: a significant boost. After decades of neglect of capital investment in our schools, this Government have quadrupled investment nationally to a point at which it is £3 billion this year and will rise to £5 billion in 2005–06.

Pupil Discipline

Nicholas Winterton: What steps he is taking to improve standards of pupil discipline in schools.

Ivan Lewis: From September 2003, all secondary school teachers will have access to training designed to help them manage unacceptable behaviour. In targeted areas, further support will be available to allow schools to have behaviour and education support teams, police in schools and more truancy sweeps. Many schools now have learning mentors and learning support units.

Nicholas Winterton: I am grateful for that reply. Does the Minister accept that one of the major responsibilities of teachers is to provide the best quality of education to the children in their care, but that that includes a standard of social behaviour and recognition of the importance of discipline? Does he also accept that many teachers are taking early retirement because of the deteriorating discipline in schools, which is particularly acute in Cheshire, where for the last year for which figures were available there was an increase of some 52 per cent. in teacher vacancies? What more will the Government do to abolish political correctness and to recognise the importance of discipline?

Ivan Lewis: The concerns that the hon. Gentleman articulates are shared by hon. Members on this side of the House. It is a source of deep regret that words like "discipline" and "respect" have become dirty words in far too many sections of our modern society. It is also a cause for regret that we do not talk equally about responsibilities as well as rights. I genuinely hope that we can build a new political consensus on the importance of rights and responsibilities in our society. But I am not persuaded that we shall be able to do so, because when we have this debate what frequently happens is that we have sneers and empty rhetoric from many of the hon. Gentleman's colleagues, who would have people believe that the decline in behaviour and discipline has been entirely the responsibility of Labour Governments. I say to the hon. Gentleman—

Mr. Speaker: Order. Time is up.

THE SOLICITOR-GENERAL

The Solicitor-General was asked—

Serious Fraud Office

David Heath: If she will make a statement on the effectiveness of the Serious Fraud Office.

Harriet Harman: The Serious Fraud Office investigates and prosecutes cases involving serious and complex fraud. Its lawyers subject these very challenging cases to intense scrutiny. Its effectiveness is monitored in three ways: an internal audit is conducted annually by the Inland Revenue; it is scrutinised annually by the National Audit Office; and it has the active engagement of a non-executive director. In the 10 years since it was established the outcome of SFO trials has been 30 per cent. of defendants acquitted and 70 per cent. of defendants convicted.

David Heath: With the best will in the world, the Solicitor-General must accept that the performance of the Serious Fraud Office in bringing successful prosecutions has been patchy. Will she consider whether there might be merit in talking to her right hon. Friends in Government with a view to bringing together the Serious Fraud Office, the Inland Revenue, Her Majesty's Customs and Excise, and indeed the City of London police, so that we have a more effective body able to work over a wider spectrum and capable of attracting the best possible calibre of officers?

Harriet Harman: I do not accept that the record of the Serious Fraud Office has been patchy. The prosecutors on fraud do get together; the Department of Trade and Industry, the Inland Revenue and Customs work closely together with the Home Office, and with their counterparts in the police, particularly the City of London police. So that is already under way.

Chris Bryant: Is it not the case that in fact over recent years the Serious Fraud Office has seen significant improvements in its track record? Does not that suggest that there might be value in extending its powers to look at other areas of fraud as well?

Harriet Harman: I thank my hon. Friend for those comments. I pay tribute to the work of the Serious Fraud Office, under the leadership of Ros Wright, who will shortly retire. The Serious Fraud Office is working very closely together with others. It is perhaps not necessary that all the fraud prosecutors should be brought together institutionally. Certainly they need to work closely together, and they do.

John Burnett: Domestic and international fraud continues to become more complex and more sophisticated. Does the Solicitor-General believe that the Serious Fraud Office has sufficient multi-disciplinary professional skills? Are there sufficient accountants, experts and valuers, as well as lawyers, with language skills and detailed knowledge of the international jurisdictions and international laws? In other words, do we have a Serious Fraud Office that is an effective fraud-fighting force?

Harriet Harman: The hon. Gentleman makes very important points, including the fact that fraud is global. Clearly, he understands what many people do not: that serious fraud is connected to money laundering, drug dealing, terrorism and human trafficking, and that it is global and needs to be challenged globally.
	When I visited the Serious Fraud Office recently, I went to its mutual legal assistance unit, which carries out investigations for other Governments on the basis that those Governments will then carry out investigations for us. It will prosecute cases involving many jurisdictions. It has huge piles of documents, sometimes translated into as many as 15 languages. It also has a map of the world on the wall, not because its members are junketing or planning their holidays, but because fraud is global. But, of course, it is a small organisation dealing with a big problem, and no doubt it could do more if it were larger.

Infanticide

Tim Loughton: What guidance she gives to the Crown Prosecution Service relating to prosecution of cases involving unlawful killing of children by parents or carers.

Harriet Harman: When prosecuting cases involving unlawful killing of children by parents and carers, CPS lawyers are governed by the code for Crown prosecutors and by the additional guidance for the prosecution of cases involving allegations of child abuse. Senior Crown prosecutors are responsible for cases involving the death of a child, and they instruct senior barristers to advise and to appear for the Crown at court.

Tim Loughton: The Solicitor-General will know that on average one to two children are killed at the hands of their parents or carers every week. Two years ago, for example, out of 88 child homicides, only 19 cases were prosecuted in the courts. Worse still, very few result in a conviction for murder, such as the case in my constituency of four-year-old John Smith whose foster parents were eventually only prosecuted for child cruelty, rather than murder, because the law of joint enterprise meant that it was not possible to prove who dealt the fatal blow. In the spirit of Lord Laming's findings, which require all agencies to work much more closely together to prevent child killings and penalise such acts when they do happen, what advice is she giving to her members of staff to ensure that the prosecution rate is increased so that it acts as a real deterrent?

Harriet Harman: The hon. Gentleman makes a number of important points. The first to consider is the issue of prevention, which involves all the agencies working together to identify children at risk. The Government are concerned about that following Lord Laming's report. The second point relates to the challenge that such cases present in terms of prosecution. He is absolutely right that it is difficult to bring people to justice if more than one person is involved in killing a child. Although the child has clearly died as a result of a criminal act, it is often not possible to work out who of those present with responsibility for that child was criminally responsible. As he says, often the lesser charge of neglect is the only charge that can be made and that does not reflect the seriousness of the offence.
	The hon. Gentleman will know about the National Society for the Prevention of Cruelty to Children working party and the conference that it held on the subject, and it is producing proposals. He will also know that the Law Commission is considering the matter. The issues that he raises are important and I think that action will be forthcoming.

Vera Baird: Is it not the case that there is a low conviction rate in cases in which only one of two people could have caused the death when either neither speaks or each blames the other? Could not relatively straightforward changes be made in the rules of evidence to prevent that from being a ban on conviction? Could not they be introduced in the Criminal Justice Bill in Committee?

Harriet Harman: Changes could be made either to the rules of evidence, to which my hon. and learned Friend adverted, or to substantive law to make it easier to bring to justice those responsible for killing children. It will be important to discuss that again in the House when we see the Law Commission's proposals. We want to be sure that we get it right and consider the evidential as well as the substantive legal aspects.

George Osborne: Following the wrongful conviction of my former constituent, Sally Clark, will the right hon. and learned Lady confirm that there will be a full inquiry into the way in which the CPS handled her case? Will she also comment on the suggestion that it may be wrong to bring murder convictions if there is medical uncertainty about the death of very young infants in such cases?

Harriet Harman: We have yet to see the full judgment of the Court of Appeal in the Sally Clark case. When we do, we will be able to consider what action, if any, needs to be taken. The hon. Gentleman raises the very important issue of medical expert reports and evidence. We know too little about the causes of sudden infant death. I pay tribute to the work in Manchester and St. Thomas's hospital to research those matters further. The Home Office is looking closely at the issue of medical evidence. In particular, there is a shortage of paediatric pathologists available to give expert advice in such trials. I am sure that the points that he raises will be subject to further scrutiny and action.

Nick Hawkins: Does the Solicitor-General recognise that we wish to work with the Government in their analysis of the issues raised by the Clark and Climbié cases? Will she agree to work with all parties in the House on these terribly harrowing issues? I know from my own past experience at the Bar how difficult those cases are, but the Opposition are gravely concerned about the quality of some of the expert evidence given by medical practitioners and social services. Sometimes, the best experts are not available to the prosecution. Will the Solicitor-General undertake to look into those issues seriously and work with all parties on this matter?

Harriet Harman: Certainly, I welcome warmly any input into those discussions by the hon. Gentleman and his colleagues, and look forward to meeting him and discussing the matter further. He made a point about the quality of evidence. There are two issues—first, the quality of evidence and the available pool of paediatric pathologists, which I mentioned in response to the hon. Member for Tatton (Mr. Osborne), and secondly, the issue of conflicting evidence. In the Sally Clark case, there were 12 medical experts, all with different views. We need to know more, so I shall raise the matter with the Department of Health. We must get expert pathology better sorted out, which is a matter for the Home Office. Prosecution must be effective, and will no doubt be enhanced by the discussion arising from the work by the NSPCC and the Law Commission.

Business of the House

Eric Forth: Will the Leader of the House please give us the business for next week?

Robin Cook: The business for next week will be as follows:
	Monday 10 February—Second Reading of the Police (Northern Ireland) Bill [Lords].
	Tuesday 11 February—Second Reading of the National Minimum Wage (Enforcement Notices) Bill [Lords], followed by motion to approve the Northern Ireland Arms Decommissioning Act 1997 (Amnesty Period) Order 2003.
	Wednesday 12 February—Opposition Day. There will be a half-day debate entitled "The Government's Failure on the Economy and Public Services" on an Opposition motion—[Hon. Members: "Hear, hear."] I am glad to hear that the Opposition support their own motion.
	That will be followed by proceedings on the Income Tax (Earnings and Pensions) Bill, followed by a motion to take note of various European documents relating to the mid-term review of the common agricultural policy and the operation of milk quotas.
	Thursday 13 February—Debate on education for 14 to 19-year-olds on a motion for the Adjournment of the House.
	Friday 14 February—The House will commence the constituency week, and will return on Monday 24 February.
	The provisional business for that week will include:
	Monday 24 February—Second Reading of the Industrial Development (Financial Assistance) Bill.

Eric Forth: I am grateful, as ever, to the Leader of the House for giving us the business. Will he give us the date for the annual Welsh debate—the St. David's day debate—as it is important that we know that as soon as possible? I acknowledge that this year St. David's day does not fall conveniently in the parliamentary calendar, but it would help to be given the date as early as possible.
	May I ask, yet again, whether we are going to have a date for the Budget? What is the Chancellor afraid of? Is he running away from something, or can he not make up his mind? When will he share the Budget with us? As I reminded the Leader of the House last week, the Treasury Committee said that we should receive proper notice of the Budget date. Am I to assume that the Budget will not even be in March? Is it slipping into April? Will the Leader of the House please give us a clue so that we can all be ready to examine the Chancellor in detail following his Budget statement?
	Yesterday in PMPs—[Interruption.] In Prime Minister's porkies, my right hon. Friend the Leader of the Opposition asked the Prime Minister for his view of the London congestion charge. The Prime Minister said, "Not me, guv." Well, what he actually said at column 267 was that that was
	"a decision not for us but for the Mayor."—[Official Report, 5 February 2003; Vol. 399, c. 267.]
	I am told that Mayor Livingstone was heard to say on television last night, "I couldn't have implemented the congestion charge without £200 million from the Government." That raises a number of questions that we ought to debate. It was the Labour Government who created the ghastly mayoralty and gave the Mayor his ghastly powers, so if Labour did fund the congestion charge, as the Mayor told us, how can the Prime Minister not have a view on it? I find that difficult to understand, but, if we have a little debate on it, perhaps the Prime Minister can come to the House and clear the matter up for us.
	May we have a complete rerun of the debate and the votes on Lords reform? When I read my Hansard, I was astonished to find that the Prime Minister had managed to vote only once on the issue. The one vote that he cast was directly at odds with his own party manifesto commitment, and directly against what the Leader of the House had been urging us to do.
	Matters are worse than that. The Chancellor did not vote at all. We ought to know why. [Interruption.] I am in a generous mood, so I will get into Hansard the fact that some bright spark on the Government Benches has just said that the Chancellor was working on his Budget. The Chancellor is obviously not working on his Budget; we have not been told the date for it yet, so that eliminates that possibility.
	On Radio 4 this morning, I distinctly heard the right hon. Member for Copeland (Dr. Cunningham), the distinguished Chairman of the Joint Committee on House of Lords Reform, being asked whether the Labour Whips were in action during the voting. To my astonishment, the right hon. Gentleman said yes, the Labour Whips were indeed very active in urging Labour Members to vote against what the Leader of the House wanted to do and in support of the Prime Minister. We were assured that it was to be a free vote, yet a distinguished senior Labour politician tells us that it was not a free vote at all. We must have a rerun so that the Prime Minister can vote, the Chancellor can vote, and we can have a proper free vote.
	We must clarify one final issue. I want an assurance that there is no hidden agenda. I suspect that what may now happen is the abolition of the hereditary peers and the setting up of some ridiculous bureaucracy that will be called an appointments commission, which the Prime Minister will claim gets rid of patronage. We have heard him say that before. However, the Joint Committee report states:
	"Only the Prime Minister would have the right to have nominations"—
	that is, to the upper House—
	"confirmed."
	How can we square the Prime Minister's repeated assertion that he wants to set up a patronage-free system with the fact that the Joint Committee report states that only the Prime Minister would have the right to have nominations confirmed? That is a question that the Prime Minister may want to answer, if the Leader of the House cannot. Will the Prime Minister, or the Leader of the House on his behalf, refute that suggestion and give us a guarantee that nothing of the kind will ever happen?

Robin Cook: The right hon. Gentleman asked a range of questions; let me try to deal with them one at a time.
	I am happy to assure the House that the Government are well aware of the importance that the House attaches to Welsh day. We will make sure that there is a Welsh day as soon as practicable upon our return. We are always keen to have a Welsh day debate, in order to remind the world outside that there is not a single Conservative MP from Wales.
	I have no reason to believe that the Budget will not take place at some point in March. There is no slippage, and it would be entirely normal to announce it some time during February.
	On the £200 million announced by the Mayor yesterday, we welcome the fact that we have secured a settlement with him on the funding for the public-private partnership—a settlement that, I am pleased to say—

Eric Forth: A settlement?

Robin Cook: If the right hon. Gentleman will contain himself, I shall answer his question. The Mayor welcomed the settlement of the PPP in his singularly expressive terms: "We got beat." It would have been very helpful if he had concluded that the settlement was going to happen two years ago and not deprived us of the opportunity of getting on with improving the infrastructure of the tube.

Eric Forth: What has it got to do with the tube?

Robin Cook: The answer is that the £200 million is part of the package for improvements in the tube. That is exactly what it is. It is to the credit of the Government that we are providing the funds that will enable the tube to proceed. None of that money is for the congestion charge; it is all about improving public transport in London for Londoners.
	I admire the right hon. Gentleman's enthusiasm for a rerun of Tuesday. Indeed, I am sure that many of us have replayed Tuesday in our minds in the hours since then. As a practical politician, I am always one for rerunning votes, although I cannot necessarily express the same enthusiasm for rerunning the debate. If we are going to go back over who voted for what and what happened in the Division lists, I may say that I felt—I am sure that my hon. Friends will agree—that one of the striking features of Tuesday's Divisions is that a majority of Conservative MPs voted against the Conservative policy of 80 per cent. of peers being elected. In the light of the fact that he could not even persuade the majority of his own party to support its policy, I think that a touch of humility from him would immensely enhance the attractiveness of his personality.
	The fact of the matter is that all options were defeated on Tuesday; there were no winners. I asked the House to give a clear, coherent and commanding lead on one option for reform. Plainly, we did not secure that from the House on Tuesday. We will continue to look for that support for an option for reform in this House, but the bottom line is that there will be no reform of the House of Lords until there is a majority vote in the House of Commons.

Paul Tyler: We understand that the United Nations arms inspectors will report to the Security Council on Friday 14 February, which is, of course, just before our constituency week. Given that we would assume and hope that the United Kingdom Government will then try to have some positive input into a draft second resolution for the Security Council, may we have an undertaking from the Leader of the House that this House will have an opportunity to debate the nature of that second resolution and that, if necessary, the House will be recalled during our constituency week for that specific purpose?
	The House will now be in some difficulty until the Government give us a new statement on the revised remit that will obviously be necessary for the Joint Committee on House of Lords Reform. Accepting what he has just said, does he understand that this House has voted very clearly against a fully appointed House? Indeed, that was the only substantial majority on Tuesday night. Whatever the Whips were doing, they lost, as the option favoured by the Prime Minister and the Lord Chancellor was defeated. I assume that both of them are democrats, so will the Leader of the House give us an absolute assurance that the Joint Committee will not now be expected to work up proposals for a fully appointed House, which would clearly be a complete constitutional farce? Indeed, I suggest that it would be improper for Members of this House who serve on that Committee to be asked to do that job after this House has defeated that proposition. I also hope that the Lord Chancellor and Prime Minister, who have made great play of the pre-eminence of this House, will accept that the pre-eminence of our vote must count on this issue. In those circumstances, when can we expect a statement from the Government about what should happen next and on whether there will be a revised remit for the Joint Committee or whether it should wind itself up?

Robin Cook: On the hon. Gentleman's first point, I fully understand the importance that the House attaches to being able to debate and discuss Iraq. Indeed, there will be another statement on the matter today. I do not know whether a Security Council resolution will immediately follow on 14 February. I would only say to the House from my experience of such matters that it takes more than a few days to get agreement on a text for a Security Council resolution. I am therefore not suggesting that the House will necessarily have its constituency week interrupted, but we have all shown ourselves willing if the case arises—I am not saying that it will do so—for the possibility of recall to be on the agenda. Of course, we are away for only one week and there will be an opportunity for the House to consider the matter when we return on the week beginning 24 February if that is necessary.
	I remind hon. Members that the House approved a remit for the Joint Committee on House of Lords Reform by resolution last summer. It provides for the Joint Committee to continue its work to devise detailed proposals in the light of votes in the House. No doubt the Committee will want to meet and consider the votes that were held this week. I echo the hon. Gentleman's comments that a fully appointed House secured the least support and the greatest opposition on Tuesday. A majority of Members from all parties, including the Labour party, voted against it. I am therefore sceptical about the allegation that the Labour Whips were working on the matter. Labour Whips are competent and efficient; I therefore cannot believe that they would place themselves in a minority in the Labour party.

Paul Flynn: If the vote on war in Iraq is held after hostilities start, it will be judged to be a vote of loyalty: opposing the war would be perceived as an act of betrayal against our troops in battle. Are not all our elections as valid as that of my right hon. Friend the Member for Sedgefield (Mr. Blair)? Is not it right that the strong opposition that our constituents are expressing to a war of aggression is heard in the House before it is decided to send our troops into battle to kill and be killed?

Robin Cook: Of course I fully understand the gravity of the issue and its importance not only to hon. Members but their constituents. I assure my hon. Friend that there will be opportunities for hon. Members to debate the matter again. [Hon. Members: "And to vote?"] And to vote on it, too. [Interruption.] If I may be allowed to answer the question, we provided for a debate, a motion and a vote on the previous Security Council resolution. I have no reason to believe that that will not happen in the case of a further resolution.

Mark Francois: Will the Leader of the House find time for an early debate on shortages in health services in Essex? That would give us a chance to raise a problem that affects many of my constituents, who have recently been removed from the list for chiropody and podiatry treatment because a review of that service has been undertaken. How can it be that the Government plough billions of pounds into the health service at one end yet the service on the ground appears to be getting worse?

Robin Cook: I must disagree with the conclusion of the hon. Gentleman's question. We are investing large sums in the national health service. Indeed, we have provided a greater increase in the health service than any other major country, and that is yielding results in the substantial increase in operations and the great reduction in those on waiting lists. There may be circumstances in areas such as that to which the hon. Gentleman refers when the local health service reaches a judgment about reassessing its priorities. I stress that the Government are keen to devolve decision making to local areas and allow those in the front line to determine the right priorities for the area. It would be wrong for me to say from the Dispatch Box that they should change their priorities.

Neil Gerrard: Cannot the Leader of the House find time for a debate on section 55 of the Nationality, Immigration and Asylum Act 2002? It provides for the removal of all support for asylum seekers who claim in country. The House of Commons has never debated that section properly. It was the result of a last-minute Lords amendment, which was debated for only 15 minutes because of the guillotine. It is being implemented in a way that is different from indications that Ministers gave hon. Members when it was introduced.

Robin Cook: I note my hon. Friend's last comment, which I shall draw to the attention of my right hon. Friend the Home Secretary, who may wish to contact him to assure him about the guarantees that were given to the House.

Andrew MacKay: The Leader of the House gave a positive response on Zimbabwe two weeks ago. The position has deteriorated further, with disgraceful scenes outside the courthouse in Harare where the leader of the opposition is on trial. Does the right hon. Gentleman agree that a Minister must make a statement, not least on the problems of renewing sanctions? Many of us believe that sanctions, especially smart sanctions, should be increased. A Minister should also explain the special problems that we are experiencing with the French.

Robin Cook: I fully understand the right hon. Gentleman's consistent interest in, and concern about, the issue. We in this country must be careful about what we say about the conduct of the trial, because it could be misused. Therefore, if he will forgive me, I will make no comment on that matter.
	On the generality of the issue that he raises, he is correct to say that the situation continues to deteriorate in Zimbabwe and we have grave concerns about the increasing degree of violence that is being used to suppress legitimate views. Many millions in Zimbabwe also feel real anxiety about where their next food will come from.
	We have provided a range of sanctions against Zimbabwe and we have always sought to find a balance between ways to demonstrate our rejection of the policies of the regime and our wish not to harm the ordinary people of Zimbabwe. That is a difficult balance to get right. However, I hope—in the light of the latest developments—that the cricketing authorities will be able to resolve the present problem and that we will be spared the embarrassment of the English cricket team going to Zimbabwe.

Harry Barnes: Is my right hon. Friend aware that the health of local government is even more important than the health of the House of Lords, Members of which some of us would gladly throttle? Is he also aware that the democratic decision-making powers of local authorities are under serious threat from the response of the Department of Trade and Industry to the general agreement on trade in services? May we have a debate on the dangers to local authorities? Their powers over planning operations, local economic development proposals and sustainable development may be blocked. Those powers are important to the well-being of our democracy and to social provision.

Robin Cook: I am not sure that throttling Members of the House of Lords would be consistent with the health of the House of Lords, with which my hon. Friend began his question. However, he raises two profound issues. First, it is important that we make progress on the general agreement on trade in services, which reflects the substantial importance and growing significance of services to our economy and, at the same time, it shows that we respect the right of countries to ensure that they preserve public services for their people.
	Secondly, my hon. Friend raised the important issue of the freedom of local authorities, to which the Government are fully committed. I am not at present aware of any threat to British local authorities from the development of the general agreement on trade in services, but I am sure that my right hon. Friend the Secretary of State for Trade and Industry will keep a close watching brief on the matter.

Patrick Cormack: The interesting results on Tuesday included—as the Leader of the House has pointed out—Opposition Members' rejection of the so-called official policy of the Opposition. I fully accept that a genuine free vote was allowed to Members on both sides of the House, but will he give us an undertaking that he will not put any pressure on the Joint Committee, but give it time to deliberate as much as it wishes, and that we will have no further debates on the future of the House of Lords for the rest of this Session?

Robin Cook: I am not sure that I can entirely reassure the hon. Gentleman on that last point. Indeed, I am wearily resigned to the fact that we will have to return to the matter again. I agree that Tuesday's proceedings were interesting—indeed, fascinating—and I am grateful to him for confirming my point that the majority of Conservative Members rejected the Conservative policy.

Ann Cryer: May we have a debate on the growing nightmare faced by many of our constituents, especially in northern cities and towns, from the creeping dereliction and abandonment of terraces of housing? I raised the issue with my local authority and suggested that, once one house in a terrace became derelict and abandoned, we should try to nip the problem in the bud by using compulsory purchase orders. I was told that it is very difficult to obtain CPOs—it takes a long time and is expensive—and my local authority did not want to try. The Planning and Compulsory Purchase Bill, which is going through Parliament at the moment, would not affect that problem, because it covers compulsory purchase of land.

Robin Cook: I fully understand my hon. Friend's concern about the dereliction of some of the inner cities in the regions of England and, indeed, in Scotland, although it is a devolved matter. I also understand why my hon. Friend has made that point on behalf of her constituents and the impact of blight on their lives. She will be aware that only yesterday the Deputy Prime Minister made a major statement on sustainable communities and I am pleased to remind her that it included an additional £5 billion to help with regenerating communities. I hope that as part of that programme we will be able to assist some of the communities to which she refers.

Peter Duncan: The Leader of the House will be aware of the continuing cycle of paramilitary violence that still plagues the people of Northern Ireland during the stuttering peace process. Has he been briefed on developments overnight when several UDA members and their associates were evicted from the Province and landed at Cairnryan in my constituency? Will he make time for an urgent debate, in Government time, during which the House can examine the continuing cycle of violent blood-letting in Northern Ireland? In particular, we must consider the worrying possibility of exporting that violence to small, vulnerable mainland communities.

Robin Cook: I understand the hon. Gentleman's concern and I appreciate that that is a major issue for his constituents. I assure him that the police authorities in Northern Ireland and Scotland are co-operating closely on the issue. Our objective in Northern Ireland is to restore stability and normality and to encourage confidence in the future. We will continue to work on that and we would deplore any violent or forcible eviction of any citizens of the United Kingdom from one part of it to another.

Jackie Lawrence: Notwithstanding what happened on Tuesday evening, will my right hon. Friend accept that an item of unfinished business remains—the situation of the remaining 92 hereditary peers in the other place? In spite of the remarks of the hon. Member for South Staffordshire (Sir Patrick Cormack), will my right hon. Friend ensure that the Joint Committee considers the position of those 92 peers, because, regardless of whether people want an elected Chamber or an appointed one, I am sure that the majority view is that that remnant from the middle ages is no longer appropriate in Parliament. [Interruption.]

Robin Cook: I am not sure that all the noises that I hear are in support of my hon. Friend's conclusion. Of course, one of the important motivations for reform is finally to remove the hereditary principle from our parliamentary system. There can be no justification for people playing any part in the consideration of legislation, which others must obey, if they are there solely by the accident and privilege of birth. I agree with my hon. Friend that that is an important element of any package of reform. It would be difficult to remove that element alone, because the effect would be to create an all-appointed House of Lords, which the House rejected by a large majority on Tuesday. We would need to consider very carefully before we took a decision that was inconsistent with the vote of the House of Tuesday.

Patrick McLoughlin: Bearing in mind the well-known special relationship that exists between the Leader of the House and the Lord Chancellor, may we have time for a debate on pensions? The Government's Green Paper, published recently, contains a proposal that the single lifetime limit on savings in a tax-privileged pension should be £1.4 million. On Tuesday, we failed to vote on the Lord Chancellor's option of an 80 per cent. appointed and 20 per cent. elected House, and I am worried that we might not have the opportunity to vote on another Derry option—to reduce his pension fund from its present £2 million to £1.4 million. The House should have a chance to vote on that Derry option.

Robin Cook: I think that we have debated enough Derry options without a further one.

Andrew MacKinlay: Will the Leader of the House bring in Gurney's to transcribe the debates of next week's Standing Committees on Delegated Legislation? I draw his attention to the fact that the deliberations of the Committee that considered the renewal of the Security Act 2000 will not be transcribed until next Monday. That is a nonsense, and it makes a farce of having Hansard if we cannot have access to it almost immediately. For the Committee's work not even to be transcribed until Monday, let alone published, is unacceptable. On Monday, we will consider Northern Ireland security legislation. It should be open to the Minister, Government Departments and other hon. Members such as me to consult our deliberations, in which some material factors were raised about security at airports and the functions of the Police Service of Northern Ireland. It is unacceptable, when legislation relating to human rights and security is being deliberated on, to give priority to mere matters of debate. Will the Leader of the House comment on that?

Robin Cook: I think that I would be in some difficulty as Leader of the House if I were not to confirm the importance of giving priority to matters of debate. It is the long-standing policy of Hansard—this has not been contentious—that the first priority is to transcribe the proceedings in this Chamber, that the second priority is to transcribe the proceedings in Westminster Hall, which is treated as an extension of this Chamber, and that thereafter comes the priority of transcribing the proceedings in Standing Committees. We have a very large number of Standing Committees at present, which is putting a lot of pressure on Hansard, and I think that we have to understand that and be realistic about it. Plainly, we would all wish to have the proceedings transcribed as quickly as possible and we are all just as keen as my hon. Friend to read our own speeches as quickly as possible. I will, of course, draw his concerns to the attention of the authorities, but, given the present large number of Standing Committees, I cannot promise an immediate increase in the turnaround of Committee transcription.

Roy Beggs: The Quarry Products Association in Northern Ireland has been making representations to Members of the Legislative Assembly, to MPs and to Ministers about the very serious impact of the aggregates tax on quarrying in Northern Ireland, especially in the border areas, where there has already been a 50 per cent. downturn in productivity and sales. There is a risk of some quarrying businesses collapsing, and a serious risk to at least 1,000 jobs in Northern Ireland. Will the Leader of the House arrange for a debate on this matter in the Chamber before the Budget, because the impact of the aggregates tax in Northern Ireland was not fully examined before the decision to introduce it was made?

Robin Cook: The aggregates tax was introduced for sound environmental reasons, and the consequence of those reasons is that, in some cases, we would wish to see the environment preserved. I hear what the hon. Gentleman has said, and I am sure that the relevant Department will consider the points that he has made. As we have already observed earlier in our exchanges, several days of debate will follow the Budget, during which it will be open to the hon. Gentleman to make this point, if he wishes to press it at that time.

David Taylor: Will the Leader of the House review the arrangements for yesterday's debate on the police grant and local government finance? Of the six hours set aside, by the time the police debate and Division had taken place, there were less than two and three quarter hours left. The opening speeches from the various Front Benches—including one of pure tedium from the Liberal Democrats that induced narcolepsy among several of those present—took more than an hour and a half, which left less than an hour and a quarter. The 20 minutes for winding up left less than an hour for Back Benchers on both sides of the House to make serious points about the local government settlement which, in my own case in Leicestershire, leaves us cemented in the cellar of educational funding, with the worst ratio of funding that we have had in decades.

Robin Cook: I am very glad that my hon. Friend has had the opportunity to correct the omission from yesterday's debate by making his local point. I understand the importance of that to him and to his constituents. On the generality of the time allocated for the debate, strictly speaking, Standing Orders provide for an hour and a half. We rightly took the view that that was insufficient, and therefore provided double that length of time. If my hon. Friend compares the record on previous occasions, he will find that that is not an unreasonable provision for a debate on a very important issue, and an issue on which it is important that we also get a decision from the House.

Douglas Hogg: May I rise to support what the Leader of the House has said about the events of last Tuesday? I entirely share his dismay; my position was very similar to his own. He was right to draw attention to the fact that the one option comprehensively rejected was the proposal for a wholly appointed second Chamber, and that if all we do is to remove the hereditaries, we shall have given the Prime Minister precisely what he wants—a proposition wholly rejected by this House.

Robin Cook: I am grateful to the right hon. and learned Gentleman for his views. If I remember rightly, I also heard him expressing them this morning on the "Today" programme. He draws attention to one of the interesting features of Tuesday's votes, which is that 334 Members of the House voted for one or other of the options for a largely or wholly elected second Chamber, which is substantially more than voted for an all-appointed House. I personally regret, however, that my warning, that it was important for all who supported a largely elected House to vote for all those options, was not listened to by more hon. Members. The tragedy is that, on Tuesday, there was no single Division in which those 334 supported one of those options. If there had been, we would not be having this exchange today.

Alice Mahon: I am sure that the Leader of the House is aware of the plight of the British citizens who have been locked up in Saudi Arabia for more than two years, having been accused of bombing other expats over a fall-out about illegal alcohol production and sales. The family of one of those men, Sandy Mitchell, has asked me to raise the issue of his continued incarceration, because of his poor and deteriorating health. Will the Leader of the House ask the Foreign Secretary if he will make representations to the Saudi Government to ask for Mr. Mitchell's release on humanitarian grounds? Will he also report to the House any progress made on the plight of the others?

Robin Cook: Before I respond, may I say to my hon. Friend that I do not think that we should speculate on any of the background that may have led to the arrests of these gentlemen? I would not wish anything that I say in response to her to be seen to endorse the claim that they had anything to do with activities relating to the provision of alcohol. I fully understand my hon. Friend's concern about the welfare of these British citizens and I can assure her that the Foreign Office has been making representations on consular grounds for a long time regarding their welfare and their legal treatment. It was doing so even before the general election, and has continued to do so since. I will certainly draw the attention of the Foreign Secretary to my hon. Friend's observations today.

Mark Field: I apologise for returning to the issue of the congestion charge that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) brought up earlier, but I have written on a couple of occasions to the Leader of the House on the matter without getting a satisfactory response. I am one of seven Members of Parliament who will have to cross the congestion charge zone to carry out their constituency duties. I will not reimbursed for that. However, the large number of Ministers in Parliament will be reimbursed, although the Leader of the House said when he wrote to me some time ago that the purpose of the charge was to prevent the everyday use of cars. Will he now ensure that Ministers are not exempt from the congestion charge? Will he also tell me which constituency duties in Livingston he feels should not be compensated for? It is an absolute disgrace that the seven central London Members of Parliament will have to go about their everyday duties without receiving compensation in the way that I have set out.

Robin Cook: The mileage allowance for Livingston is identical to the mileage allowance for any other constituency the length and breadth of the United Kingdom. On the congestion charge, the issue has been examined not only by me but by the advisory panel to the Speaker. We have all come to the same conclusion, which is that, as the charge is a tax, it would be improper for the House to reimburse Members for it out of our allowance system. Nor is there any exemption for Ministers. Ministers travelling by private car will have to pay the charge in the same way as anybody else, and when they travel in a ministerial car, the corporate fleet will be charged in the same way as any other corporate fleet.

Tom Watson: Will my right hon. Friend set a date on which the House can review the new working arrangements? Is he aware that many of us who voted for the reforms did not fully appreciate that we were voting for the parliamentary equivalent of the split shift rota, with a late ending on a Monday and an unfeasibly early start for Committees on a Tuesday? I am afraid that many of us think that these family-friendly policies have left us all knackered.

Robin Cook: I am very sorry to hear that my hon. Friend felt that he did not fully appreciate what he was voting for. In fairness, I should say that I tried, at great length and over a long period of time, to explain what he was voting for, and I suggest that he considers it more carefully before he votes again.

John Redwood: In view of the strong feeling in the House and the country that when dealing with the Iraqi dictator we should proceed democratically and work through the United Nations, will the Leader of the House give us an early opportunity to debate the important testimony submitted by the United States Secretary of State, so that the House can hear the Government's view of what does constitute proof?

Robin Cook: The Foreign Secretary of course responded immediately to Mr. Colin Powell's statement. He did so in the Security Council. His view is on the record, and is well known.
	I am sure that we shall return to this issue on a number of occasions, and when we do Mr. Powell's evidence will obviously be one of the factors that we shall wish to take into account. I personally felt that the evidence that he provided of concealment and evasion in respect of the inspectors' work was an interesting addition to the debate, and one that should be troubling.

Jon Trickett: Does the Leader of the House recall the Deputy Prime Minister's saying in his statement yesterday that he intended to present a housing Bill one of whose provisions would give local authorities enhanced powers to deal with unscrupulous private landlords who are ruining local communities? Those powers are urgently needed in former mining communities such as Featherstone, Hemsworth and South Elmsall, where the activities of such landlords are not just blighting communities but leading to their abandonment. Will the Leader of the House confirm that the Government intend to legislate robustly, and will he take my voice, at least, as encouragement to them to act expeditiously?

Robin Cook: I entirely understand the importance of this measure, especially in deprived areas and areas where there is not much housing demand. I agree that we need a clearer, better system of licensing private landlords in order to check abuse in the sector, and I assure my hon. Friend that that will be an important element of the forthcoming draft housing Bill.

Richard Younger-Ross: Will the Leader of the House ask the Secretaries of State for Trade and Industry and for Work and Pensions to make a statement on the proposed changes in arrangements for payment of benefits through post offices? As he may know, forms and information packs will not be issued until the end of March, just before the change. There is a lot of uncertainty among postmasters, who want to have the information much earlier. Post offices, including the one at Milber in my constituency, are still closing. The Milber postmaster blames the Government, firmly and squarely, for the closure of his post office.

Robin Cook: Of course the fullest possible information should be provided at the earliest opportunity. I shall ensure that the hon. Gentleman's observations are passed to the Departments concerned. It is also important, however, for us to give members of the public maximum freedom to decide how they wish their benefit to be paid. All Members should support that important principle, which might well result in some people choosing to receive their benefit in other ways. We should not deny them that opportunity.

Jim Knight: I share others' disappointment over Tuesday's votes, especially as a Labour Member, but I take some crumbs of comfort from the fact that most Labour Members who voted supported "wholly elected" or "substantially elected" options. I think, however, that many Members were confused about how to vote if they supported indirect election, and also about the roles and powers of a second Chamber. Could not the Joint Committee do a bit more work on those issues?

Robin Cook: I do not think there is any need for further work on the roles and powers of a second Chamber, as I think there is almost universal consensus on that principle, and when dealing with this issue one clings strongly to principles that have achieved universal consensus. Certainly the Joint Committee needs to work this out a bit more, but I do not think there is any disagreement on the fact that the second Chamber should be a revising Chamber, the fact that it should have power to delay but not to veto legislation, and the fact that it should have no powers over taxation.
	I am aware that a number of colleagues believed that by voting for appointment they were voting for indirect election. I am all for taking them at their word and seeing whether we can find a greater consensus in favour of a democratic mandate through indirect election than we secured on Tuesday. I am glad that the Chairman of the Joint Committee said today that the Committee would examine the possibility of working out an option including indirect election at least in part.

Eric Forth: I hope not.

Robin Cook: I can tell already from the right hon. Gentleman's face that that will not command universal consensus on both sides of the Chamber, but since many of my hon. Friends appear to have meant that they wanted indirect election when they voted for appointment, I think it right for the Joint Committee to explore the possibility.

Bob Spink: As the right hon. Gentleman is such a caring man, will he find time for a debate on the crucial importance of speech therapy, and in particular the importance of fully meeting children's statemented needs? That would give us an opportunity to thank all who work in speech therapy for their dedication and professionalism, and to try to ensure that funds get through from the primary care trusts to the sharp end so that children receive proper provision, especially in south Essex.

Robin Cook: The hon. Gentleman makes his point well. We all salute the work of speech therapists, and recognise their immense importance in developing young people's confidence so that they can continue other aspects of their education. We hope that our increased, record investment in the national health service will provide adequate support for speech therapy.

Julie Morgan: Will my right hon. Friend find time for a debate on youth justice? I am sure he is aware of the shocking report from the chief inspector of prisons, Anne Owers, on Ashfield young offenders institution near Bristol. He may not know, however, that because of a lack of provision in Wales many young people from Wales serve their sentences in that prison. The plan is now to empty the institution, which will greatly concern families in Wales because young offenders may be even further from family and friends as a result. Will my right hon. Friend ask the Home Secretary to consider where such young people will be placed in future?

Robin Cook: I am sure that all Members, regardless of whether they represent one of the local areas, will share my hon. Friend's concern over the very worrying report on the Ashfield centre. I assure my hon. Friend that Ministers are following the work of the Prison Service with the closest attention. I will ask them to write to her setting out the particular implications for young offenders from Wales.

Stephen McCabe: Will Ministers and officials meeting Mr. Kharrazi, the Iranian Foreign Affairs Minister, raise with him Iran's appalling human rights programme and its own secret weapons programme? Does my right hon. Friend appreciate that some of us, while accepting that the spotlight should be turned on Iraq, cannot understand why we are asked to turn a blind eye to the bloodstained activities in Tehran and the secret weapons programme that it is developing? Could we have an opportunity to discuss that?

Robin Cook: I am confident that my colleagues at the Foreign Office have continued the dialogue on human rights with Iran that has been proceeding for some time. I understand my hon. Friend's concern about, in particular, the potential weapons programmes in Iran, but what has been encouraging over the last few years is the substantial support among the Iranian electorate for forces of modernisation and moderation, and the extent to which they have rejected the hardline clerics' position.
	It is one of the unfortunate features of Iranian politics that the military and security aspects are in the hands of the revolutionary authorities set up by the hardline clerics rather than those of the democratic and elected Government of Iran. If we want to assist the people of Iran, it is in our interests to support and welcome the modernising forces of which Iran's elected Government and Mr. Kharazi are a part, and make sure it is clear that the west is willing to work with the forces of moderation and democracy in Iran.

David Chaytor: In view of the crucial importance of the evidence presented to the UN yesterday, may I add my voice to those calling for a specific debate on the question of evidence—also in view of the weapons inspectors' report, which will appear next week?
	After business questions we shall hear a welcome statement on our contingency preparations in respect of Iraq, but we shall not have an opportunity to discuss the evidence to which the contingency preparations are designed to respond. Does my right hon. Friend not consider that unusual?

Robin Cook: I am quite sure that the evidence will play a crucial part in any discussion on policy in relation to Iraq. In fairness to my right hon. Friend the Foreign Secretary, he has sought to put in the public domain a lot of the evidence available to the British Government. My hon. Friend is right to say that those who are concerned about what action might be taken in relation to Iraq will necessarily wish to probe, examine and assess the evidence for themselves. That must form part of any future debate, and I can assure the House that there will be an opportunity for that to happen in any such debate.

John Cryer: May we have a debate on early-day motion 561?
	[That this House notes that community pharmacists offer their local communities convenient access to NHS services; recognises their role in reducing the burden on local general practitioners; notes the recommendations of the Office of Fair Trading that pharmaceutical dispensing should be made open to free market competition; is concerned that supermarkets would use their market power to undermine and eliminate small local pharmacies and thereby effect a net loss of NHS provision; and urges Her Majesty's Government not to accept this recommendation of the OFT.]
	The motion relates to the Office of Fair Trading's recommendation that pharmaceutical dispensing be opened to the free market. That would threaten the existence of hundreds, if not thousands, of small chemists, and would open yet another sector to the rapacious tendencies of the big supermarket chains. For many communities, that would be simply unacceptable. If we cannot have a debate, may we at least have a statement, so that the many of us who are concerned about this issue might recommend that the OFT proposals be thrown out?

Robin Cook: I am not familiar with that OFT report, but I shall make a point of becoming so as soon as I leave the Chamber. I fully share my hon. Friend's concern that we ensure that local community pharmacists have every opportunity to continue in business. I am well aware from my constituency work how much constituents value them, and I am sure that other Members are, too. It is important that we take forward a proper competition agenda, while at the same time ensuring that we preserve local services.

Several hon. Members: rose—

Mr. Speaker: Order. There are six hon. Members left to speak, and if the questions are brief, I can take every one of them.

Glenda Jackson: My right hon. Friend will be aware that today, North Korea threatened a pre-emptive strike against American troops stationed on the Korean peninsula, should the number of those troops be increased. The Prime Minister has committed this country to contesting North Korea through the United Nations, but equally, it is British Government policy—should a second resolution on Iraq be tabled and one of the five permanent members of the Security Council exercise a veto—that this country will still engage in a war against Iraq. May we have a debate on what precisely the British Government's policy is in respect of the United Nations?

Robin Cook: I am quite sure that there will be further opportunities for the House to debate this matter, but there is no doubt about this Government's commitment to the United Nations. Indeed, it is partly as a result of the Prime Minister's energy and activity that we have kept the Iraq crisis firmly anchored in the UN, and that the next stage of developments on Iraq will be for UN inspectors to report to the Security Council. They are in Iraq only as a result of the action that we and other countries have taken to ensure that the issue was raised through the Security Council.

David Clelland: We can all play about with the statistics arising from Tuesday's votes and come to conclusions that suit our own arguments, but that is a rather silly avenue to go down, and I hope that my right hon. Friend will try to rise above it. What is clear after Tuesday is that the status quo is not an option and hereditary peerages must go—indeed, even their lordships did not vote to retain them. I welcome what he is now saying about indirect elections, but will he have a word with his colleagues on the Joint Committee who supported the elected option—they included the hon. Member for North Cornwall (Mr. Tyler), who voted to have any reference to indirect elections removed from the report?

Robin Cook: I am not quite sure which of the statistics that I quoted my hon. Friend is taking exception to. If he wants to amend any of these statistics, I will cheerfully correct the record, but I notice that he did not suggest that I was wrong in any particular fact in respect of those that I quoted. What I did say is that all options were defeated—there were no winners on Tuesday. I agree with him that the status quo is unacceptable, but unfortunately, as a result of Tuesday we do not currently have an alternative to it, and there is no facile and easy solution.

Richard Burden: In considering the options for the future of Lords reform, does my right hon. Friend agree that how Parliament should be composed, how many Houses there should be and who should be in them are questions not just for parliamentarians in this place or the other place, but for the public, who might also have a view? Given that they voted in an election for a more democratic second Chamber, that polls indicate that they still support that proposal, and that the other place voted that the public should keep their noses out, does my right hon. Friend feel that we should find a way of gauging whether the public do indeed still feel the same way?

Robin Cook: I agree with my hon. Friend that this is not a matter in which we should simply indulge ourselves by choosing our own preference; we must also carry the public with us. Having been through the debates on House of Lords reform that we have had in the past 18 months, I certainly do not want this issue to continue for a further 18 years. It is therefore very important that when we make a change, we make one that will stand the test of time. It will do so only if we can carry with it the confidence of the public.

Ian Davidson: Can the Leader of the House find space in the schedule to debate the recent rise in unemployment in Germany of almost 10 per cent.? German unemployment is now above 11 per cent., and more than 4.5 million Germans are unemployed. The euro is clearly not working for Germany, and ought we not to debate this issue as a matter of urgency?

Robin Cook: My hon. Friend frequently expresses concern about the state of the German economy, and I am sure that his remarks will be well reported in Bonn and Berlin. I hesitate to suggest that I will draw his remarks to the attention of the Chancellor of Germany and invite him to write to my hon. Friend, which would be my normal response on these occasions. However, the decision on whether this country should join the single currency must be based on a rigorous assessment of the economic impact on Britain, not on Germany. It is very important that we recognise that one reason why so many companies have come to, and invested in, Britain—and, if I may say so, in Livingston in particular—is precisely so that they can export to the whole of the European market. It appears that many of these companies, in view of the recent figures, are reflecting on whether they wish to invest outside the eurozone.

Llew Smith: Would it be possible to have a debate on the United States' refusal to allow international inspectors into many of its chemical plants in order to verify its compliance with the chemical weapons convention? Does the Leader of the House agree that if we had such a debate, the Government could explain why it seems to be easier for international inspectors to access chemical plants in Iraq than those in the United States?

Robin Cook: I am not entirely sure to what extent such a debate would illuminate the general question of Iraq. However, it is of course the Government's policy that all countries should comply with the chemical weapons convention; indeed, we have urged the Americans to accept an inspection regime.

Joan Ruddock: May I encourage my right hon. Friend in his use of statistics in respect of Tuesday's votes? Can he confirm that, if the votes of those who voted for 60 per cent. and 80 per cent. elected are taken together—bearing it in mind that the same people were not always involved—of those voting on that night, there was a majority in this House for a substantially elected House of Lords?

Robin Cook: I would not disagree with my hon. Friend, but as I have already said, the fact remains that no one option was carried. If we are to find a way forward and a majority for one option, we will have to have more flexibility in future than we saw on Tuesday.

Iraq: Further Contingency Preparations

Geoff Hoon: With permission, Mr Speaker, I would like to make a statement on further contingency preparations in relation to Iraq.
	In a statement on 7 January, I announced the deployment of maritime forces including 3 Commando Brigade Royal Marines and a substantial naval task force. In a further statement on 20 January, I announced the composition and deployment of land forces involving Headquarters 1 UK Armoured Division, 7 Armoured Brigade, 16 Air Assault Brigade and 102 Logistics Brigade. Today, I would like to set out to the House our plans for the deployment of air forces.
	As with the Royal Navy, the Royal Air Force already maintains a significant presence in the middle east region, routinely involving around 25 aircraft and 1,000 personnel. For more than a decade, the Royal Air Force has played an important part in patrolling and enforcing the northern and southern no-fly zones over Iraq, in support of UN Security Council resolution 688, in order to provide the Iraqi people with some protection from Saddam Hussein's regime. In carrying out this task, it has on many occasions been attacked by Iraqi forces, and I am sure that the House will join me in saluting its courage and professionalism.
	As part of our contingency planning over recent months, we have been considering carefully what additional air capabilities might be required in the event of operations against Iraq. The details of that planning will necessarily continue to evolve. It is in the nature of air forces that they can be deployed over long distances more rapidly than maritime or land forces, but we envisage that in the days and weeks ahead we will increase the Royal Air Force presence in the region to around 100 fixed-wing aircraft supported by around 7,000 personnel, including members of the Royal Auxiliary Air Force. That will be a balanced and highly capable force, including E-3D Sentry aircraft for airborne command and control; Jaguar and Tornado aircraft in the reconnaissance role; VC10 and Tristar air-to-air refuelling aircraft; Hercules transport aircraft; Tornado F3 aircraft, with the newly integrated ASRAAM missile providing an air defence capability; and Tornado GR4 and Harrier GR7 aircraft providing an offensive capability should it be required, including precision-guided weapons. The Royal Air Force Regiment will protect the deployed forces. In addition, the Royal Air Force element of the joint helicopter command will deploy a very substantial proportion of its equipment and personnel, providing helicopter support to other deployed forces. Its contribution will consist of 27 Puma and Chinook helicopters and about 1,100 people.
	I take this opportunity to pay tribute to the work of the Royal Air Force's air transport squadrons, which, in addition to operating in the region itself, will work to maximum capacity in deploying and sustaining forces of all three services, supplemented as necessary by civilian charter aircraft. As with the maritime and land forces that we are deploying, these air deployments will provide a balanced and flexible force package, bringing together a wide range of capabilities. I do not intend to discuss the specific tasks that might be undertaken, but it will be obvious to the House that this represents a very substantial contribution by the Royal Air Force to the building of a credible threat of force in support of the policy objectives that I have previously set out to the House.
	I have now announced the composition and deployment of forces from all three services. I recognise that that may tempt some people into speculation about the likelihood or timing of military action. It is still possible for Saddam Hussein to change his behaviour, to co-operate actively with the weapons inspectors and to disarm by peaceful means, but, as my right hon. Friend the Foreign Secretary said, time is running out. The Iraqi regime must decide whether it will comply with its obligations or face the consequences.

Bernard Jenkin: I thank the Secretary of State for his statement and for giving me a copy in advance.
	The statement's brevity belies its significance. The Secretary of State has today put in place the final major element of a very substantial taskforce for deployment in preparation for any military action against Iraq. I join him in his tribute to our fixed-wing and helicopter pilots, particularly those who are enforcing the no-fly zones, some of whom I had the privilege of meeting when I visited Prince Sultan airbase in Saudi Arabia at the end of last year. We salute their courage and professionalism.
	Let me reiterate, lest the Secretary of State prefers to misunderstand my remarks, that Her Majesty's Opposition have confidence in the professionalism and dedication of our armed forces, but we should not take them and their excellence for granted. The sheer size of the commitment for all three services raises very serious questions about sustainability and overstretch. About 60 per cent. of the Army is now committed—that is, preparing for, on, or recovering from operations. What strain will today's very major Royal Air Force commitment put on the availability of pilots?
	When was the last time that personnel in our armed forces truly enjoyed 24 months between operational tours, which was laid down in the 1998 strategic defence review? That is desirable not only so that they can have the time with their families that most of us take for granted, but so that they are fully trained and ready for whatever operations they next face. I fully accept that the present deployment is exceptional in its size, but it raises questions about the overall size of the armed forces.
	Will the Secretary of State comment on recent reports that the Government intend to maintain peacekeeping forces in Iraq for up to three years? How could that, or even a much shorter period, be sustained while all three services remain thousands of men short of the Government's own manning targets? For example, in the light of today's announcement and a significant shortage of combat pilots, RAF pilots left with aircraft in the UK for our own air defence must be asking, "How long can we sustain full readiness while we remain so overstretched?"
	On the deployment itself, I do not expect the Secretary of State to be any more specific about the RAF's role and purpose in any Gulf operations, but will he clarify whether Sea Harrier fighters are included in the deployment? Will he confirm that, with its outstanding Blue Vixen radar, the Sea Harrier remains our most capable air-to-air fighter, which has already proved itself in the Gulf as part of the no-fly zone operation? While Sea Harrier fighters remain operational, it would be rather perverse if they were left at home simply because Ministers have decided to scrap them as obsolete in 2006.
	When will the Secretary of State be able to clarify the command arrangements? Will the relationship with the United States be the same as it was in the last Gulf war? If not, what will be different, and why? I have asked that question before, and I can see no reason for the Secretary of State to refuse to inform the House that all the key elements of the force are in place. Will he at least confirm that operating under US command does not mean that Her Majesty's armed forces cease to be accountable to the UK Government and to this House—yet another scare launched by the Liberal Democrats?
	On a particular issue of which I have given him notice, can the Secretary of State reassure the House about a report that appeared in The Washington Times yesterday, which said that, according to a US Air Force report,
	"There is significant confusion about roles, responsibilities and chain of command throughout key areas within the Combined Air Operation Centre"
	and it is not ready for war.
	This further announcement comes on the day after the Secretary of State, Colin Powell, presented the most damning indictment of Saddam Hussein's record of defiance of the UN. On the day that Dr. Hans Blix is visiting the Prime Minister, the evidence is now clearer than ever that Saddam Hussein is prepared to risk war rather than to disarm. Is it not time for those such as the Liberal Democrats to get off the fence? Does the Secretary of State agree, even at this stage, that military action is not inevitable and that Saddam Hussein still has time to comply with the UN resolutions? Nevertheless, this substantial deployment, which we welcome, demonstrates the determination of our country to back the United Nations with a credible threat.

Geoff Hoon: I am grateful to the hon. Gentleman for his support and for the support of Her Majesty's official Opposition. I shall deal with the points that he raised.
	On SDR tour intervals, I am as disappointed as he is that it has not been possible to achieve those projected tour intervals, but in the period since the publication of the strategic defence review, Britain's armed forces have been exceptionally busy. Since the Opposition have never, understandably, opposed any of the deployments that have taken place during that period, they must share in the responsibility, which I accept, for having been unable to achieve the SDR planned tour intervals.
	As regards the reports that I, too, have seen in newspapers about a three-year deployment, I assure the hon. Gentleman, as I assure the House, that they are purely and simply speculation. Clearly, our forces will be in the Gulf for as long it takes to disarm Iraq and the regime of Saddam Hussein.
	I have already dealt with the issue of Sea Harriers and the deployed forces aboard the aircraft carrier that will go to the Gulf region as part of the taskforce, and I do not need to repeat my answer in that respect.
	On the command and control arrangements, those are still evolving. We are in discussions with the United States. I assure the hon. Gentleman and the House that Britain's forces will remain under the command of the United Kingdom Government, which is always the position.
	I am certainly aware of the report in The Washington Times, but I am not aware that it is accurate.

Paul Keetch: I, too, thank the Secretary of State for his courtesy in allowing me to see a copy of his statement, and for informing me about his communication earlier today. I join him and the shadow Secretary of State for Defence, the hon. Member for North Essex (Mr. Jenkin), in sending our respects and best wishes to the men and women in Her Majesty's forces who are already in the Gulf, to their families, and to the young men and women now on their way to the Gulf.
	The Secretary of State has made three statements on military contingency plans for the Gulf. Does he expect to make any more in the coming weeks? Will he confirm that he will return to the House if further developments take place, especially during the recess that begins in 10 days' time, and that the House will be recalled if events require it?
	I assure the Secretary of State again that Liberal Democrat Members support the deployment of forces to the Gulf. However, we do not believe that they should go into action until there has been a substantive vote in the House of Commons.
	The Royal Air Force is already in theatre, as the Secretary of State said. I met RAF personnel at Ali Al Salam and Mubarak a couple of weeks ago. I support and recognise the work that they do. Will there be any change in the current role of the RAF forces already in the northern and southern no-fly zones, or any change in their rules of engagement?
	We all accept that war is not inevitable, and hope that it can be avoided. However, if military action becomes necessary, it must be under UN authority. Operations conducted in the UN's name must abide by the UN's principles. Will the Secretary of State confirm that any prisoners taken in the course of hostilities will be treated in accordance with the Geneva convention, and that any action will be proportionate?
	In the event of hostilities, there must be humanitarian contingency plans. Will the Secretary of State say what will be the role of the RAF in any humanitarian support? My hon. Friend the Member for Somerton and Frome (Mr. Heath) raised with the Prime Minister the other day the concerns of UK civilians living in the Gulf, of whom there are some 90,000. Are there are any contingency plans for the RAF to evacuate them, if that becomes necessary?
	Yet more men and women in our armed forces are venturing into potential conflict. They should know what is expected of them, in both the short and the long term. They should also know that they remain in our thoughts as we hope and strive for a peaceful solution to the crisis.

Geoff Hoon: I am grateful to the hon. Gentleman for his observations. I assure him that the Government will report to the House as and when necessary, in the light of unfolding events. However, I caution him against the insistence on requiring a substantive vote of the House before any military operations are conducted. [Hon. Members: "Why not?"] If I may explain: it is obviously vital to retain the element of surprise if military operations become necessary. That has always been the case. It would not be sensible to signal in advance our intentions to an enemy. The House must consider that very carefully.
	I assure the hon. Member for Hereford (Mr. Keetch) that the Government will treat prisoners in accordance with international law. All our operations will be fully in accordance with the principles of international law, including the use of our forces for humanitarian purposes, should that be necessary. I have described the successive deployments as both balanced and flexible, so that the forces involved can be used in a range of military options. I repeat that those options include humanitarian operations, where that is necessary.

Gavin Strang: Does my right hon. Friend agree that, as long as the UN weapons inspectors are in Iraq, the threat to world security from the Iraqi regime is at a lower level? Will he assure the House that there is no logistical reason why the Government cannot keep open the option of an inspection process lasting months rather than weeks?

Geoff Hoon: I am grateful to my right hon. Friend for his observations, but I am sure that he knows the history of the involvement with Iraq of the UN and the international community. That involvement stretches back over a period of 12 years. A series of UN obligations have been placed on Iraq, culminating in the passing of resolution 1441, which specifically sets out Iraq's obligation to co-operate with the weapons inspectors.
	It has become clear—from Dr. Blix's first report to the Security Council and from the damning evidence set out yesterday by Secretary of State Colin Powell—that that co-operation is simply not forthcoming from Iraq. It is a question not of allowing time for the weapons inspectors, but of whether there is any prospect of Iraq co-operating with the international community and the UN

Edward Garnier: I expressly support the Government's foreign policy on this matter, and the outline of the case made by the Secretary of State this afternoon. However, I urge the right hon. Gentleman to consider the position of our reserve forces. In his statement, he said that 7,000 RAF personnel, including members of the Royal Auxiliary Air Force, would shortly be in the Gulf. How many of those 7,000 will be auxiliary airmen or reservists? I understand that 6,000 Army reservists are now on call for 12-month duty. How many—

Mr. Deputy Speaker: Order. I think that the hon. and learned Gentleman has asked enough questions. He must be brief on these occasions.

Geoff Hoon: I shall try to anticipate the rest of the question in my answer. I was able to set out, in a written ministerial statement on 30 January, the Government's intention to send out further notices to secure a total of around 6,000 reservists. In broad terms, our requirement is for approximately 500 Royal Navy and Royal Marines reservists, for about 1,600 RAF reservists, and for about 3,600 Army reservists.

Jeremy Corbyn: The Secretary of State has just asserted that the House apparently does not need to have a vote on the deployment of British forces. Will he please reconsider that? The mass of British public opinion is deeply sceptical about the war, if not completely hostile to it. People believe that it is being fought in the interests of America and nothing else, and that it is largely about oil. Cannot the House of Commons have a vote at the very least, before a third of all British armed forces are deployed in a theatre of war that has neither public support nor consent?

Geoff Hoon: I ask that my hon. Friend properly represents what I said, which was that I did not anticipate that a vote would be needed before deployment took place. In similar circumstances in the past, the practice of the House has been to have a vote shortly before deployment. If that is possible, the Government will follow that precedent. If it is not possible—because of the security risks associated with having such a vote shortly before any military operation—I and my right hon. Friends the Foreign Secretary and the Prime Minister have made it clear that a vote will be held as soon as possible thereafter. I urge my hon. Friend to reflect properly what I just said to the House.

Hugh Robertson: On previous operations, members of the armed forces deployed away from their permanent duty station for a length of time have often lost out on station-specific pay, such as the living overseas allowance or London pay. Will the Secretary of State confirm that that will not happen on this occasion? Does he agree that it would be wholly wrong for any member of the armed forces to lose out financially as a result of service in the Gulf?

Geoff Hoon: I appreciate the point that the hon. Gentleman quite properly raises. We shall consider the matter carefully as part of the overall welfare arrangements. Those arrangements are still evolving, as they depend on the length and circumstances of any deployment. However, the hon. Gentleman has made his point well. I am aware of the matter, and it will certainly be taken into account.

Diana Organ: Will my right hon. Friend confirm that no members of our armed services are having to purchase their own items of equipment? Constituents of mine with relatives in the services have told me that their relatives are having to purchase their own boots and mosquito nets. Will my right hon. Friend confirm that the 7,000 RAF personnel being sent to the Gulf will not have to do that?

Geoff Hoon: I can confirm that no members of the armed forces are having to purchase equipment. However, it has long been the practice of armed forces personnel to prefer to purchase certain items or equipment for their own use. That has gone on for a very long time, and the matter has been brought to my attention regularly by the personnel whom I have had the opportunity of meeting.

Peter Viggers: The Secretary of State must know that the essentials of military planning are to know the contingency against which the plans are being made, and the troops that will be available. Does he realise that, by dribbling out news about deployments as he has done, he has made life much more difficult for military planners? The way that he has handled the matter smacks more of political expedience than military leadership.

Geoff Hoon: I have to tell the hon. Gentleman that he is quite wrong. These announcements are made precisely in response to the deliberations of military planners, who prepared the material at the appropriate stage, given the notice requirements—as I implied in my observations about the timing of any deployment of air forces. The announcements are made specifically as a result of military planning and are in no way inconsistent with that military planning.

Diane Abbott: Is the Secretary of State aware that, given the size of the US and British deployment in the region and the hundreds of thousands of forces massing on the borders of Iraq, the likelihood of any allied attack being a surprise is remote? He will have to come up with something better than that to explain to the British people why the US Congress can have a vote before US troops are sent into action but the British Parliament is denied such a vote.

Geoff Hoon: My hon. Friend knows full well the very different constitutional arrangements that exist. The Government are following well-established procedures of the House and have clearly set out the arrangements; it is clear that the preference is for a vote before any deployment, but, in the circumstances, it may be necessary to delay that until shortly afterwards. That has always been the position for the House.

Angus Robertson: I thank the Secretary of State for advance sight of his statement. Can he confirm that the majority of deployed personnel from Scotland are based in my constituency, at RAF Lossiemouth and RAF Kinloss, and that, like the majority of people in Moray, he wishes them well and hopes for their safe and speedy return? Together with other members of the armed forces parliamentary scheme, I visited airbases in the Gulf region and I have raised concerns with the MOD about communications so that service personnel can keep in touch with their families back home. Can the Secretary of State confirm that efforts will be undertaken to maintain the improvements in those vital phone and internet communication links?

Geoff Hoon: I am grateful to the hon. Gentleman for his observations and can confirm that the great majority of RAF personnel will be coming from his constituency. I note his support for that deployment. As I indicated in response to an earlier question, detailed work is being undertaken on the welfare package and I can certainly assure the hon. Gentleman that every effort will be made to ensure the most effective package possible.

David Winnick: Is not the choice simple? One accepts either the denials of the Iraqi dictator in answer to those searching and difficult questions that were put to him, or the compelling evidence given yesterday to the United Nations by the US Secretary of State. Is it not clear that the regime is engaged in deception over weapons of mass destruction and that it cannot be trusted in any way? It is an unfortunate fact that too many people in this place are willing to give credibility to a murderous dictator.

Geoff Hoon: My hon. Friend has always approached this issue with commendable consistency and absolute logic.

Angela Browning: Has the Secretary of State given any thought as to what he will do about keeping the public informed as the war progresses, if there is a war? Many of us were concerned about the amount of information in the media before part of a recent special forces operation in Afghanistan. That cannot be helpful. What thought has the right hon. Gentleman given to that issue?

Geoff Hoon: A great deal of effort goes into ensuring that the media are given accurate and up-to-date information, provided of course that it in no way compromises the safety and security of our forces. The hon. Lady is right however—there are lessons to be learned, not least by the prominent newspaper that published details of British forces' actions in Afghanistan long before they had even arrived in that country.

Dennis Skinner: How much is all this lot going to cost? Is it not a fact that in the Budget statement about £1 billion was set aside? Is the Budget being delayed because the Government are not sure of the costs if a war takes place? Will the Secretary of State confirm that it is all to satisfy the whims of a tin pot American president who had a lousier election result than Mugabe?

Geoff Hoon: My hon. Friend is well known for his determination to do the right thing and to ensure that proper action is taken, irrespective of cost, and I assure him that that is the case for this deployment. We are doing the right thing. We are taking the right decision in support of the UN and the international community and we shall go on doing so, irrespective of the cost.

James Gray: May I join the Secretary of State in paying particular tribute to the air transport squadrons, a large part of which are based in my constituency at RAF Lyneham? Will the right hon. Gentleman confirm that not only C-130J but also C-130K Hercules will be deployed? Will he comment on local rumours that, as a result of that, he intends to make a substantial investment in upgrading the defensive aid sweeps of the C-130K? I certainly hope that he will.

Geoff Hoon: I can confirm that both types of aircraft will be deploying and that part of our efforts will indeed be to improve the protection available to at least some of those aircraft in appropriate circumstances.

Harry Barnes: As we discovered during the Suez invasion, we cannot act irrespective of cost. If these contingency measures and the ones already in place are acted on, what will be the consequences for our economy, the lives of the Iraqi people and the stability of the Arab world?

Geoff Hoon: I should be happier with my hon. Friend's question if he had also addressed the costs of inaction. What are the risks faced by the international community of leaving Saddam Hussein to continue to develop weapons of mass destruction, including his efforts to develop a nuclear weapon? What are the costs to the immediate region of a country such as Iraq, which should be wealthy, successful, prosperous and an effective participant in the international community? That is not the case and the situation cannot continue indefinitely.

Vincent Cable: After the compelling demonstration yesterday by Colin Powell of the extent and range of chemical and biological weapons in Iraq, can the Secretary of State give us an assurance that all British armed forces personnel will be fully protected when those weapons are fired at them, not just when they are in the front line but when they are within range of medium-range ballistic weapons?

Geoff Hoon: I have given that assurance in the past and I repeat it: we are taking the necessary steps to provide our troops with appropriate protection against a nuclear, chemical or biological threat.

Louise Ellman: What are the implications for the contingency preparations now under way of Saddam Hussein's refusal to allow scientists to be interviewed privately by the inspectors, with their families being taken to a place of safety?

Geoff Hoon: It simply demonstrates that the international community and the UN are not receiving the full and effective co-operation that was clearly specified by resolution 1441. Above all else, it is an indication of the determination of the Iraqi regime to avoid its international obligations and to avoid implementing the resolution as required.

Patrick Mercer: I welcome the additional deployment of RAF personnel. Credible deterrence makes war less likely rather than more likely. Will the Secretary of State confirm, however, which officers will command which parts of our forces? Can he also confirm that this time they will receive the unequivocal support of the Government, unlike certain unfortunate aspects of the Afghan campaign?

Geoff Hoon: The precise details of the officers in command of each unit have now been published and I shall ensure that a copy of the release is sent to the hon. Gentleman. I assure him that he should not believe tendentious reports in our newspapers; there was absolute support for the leadership of our armed forces in Afghanistan and that will again be the case for our forces in Iraq.

Paul Flynn: As this war will be only the second in 100 years in which Britain has been the aggressor, is not it essential that we go forward with sound knowledge? To test the worth of the statements made yesterday by Colin Powell, would not it be good to assess the value of the dossier placed before the House in September, as it has proved to be almost entirely untrue? Two days ago, the Government admitted that one of their main claims was completely untrue and that none of the sites that had been visited contained weapons of mass destruction. Given the opposition of the British people, how can we go forward with such a war of aggression in which our soldiers will lose their lives and in which they may kill Iraqi innocents in their tens of thousands?

Geoff Hoon: My hon. Friend will forgive me for suggesting that he is rather confused. The United Kingdom acting in support of a clear United Nations resolution—which I assume my hon. Friend supports and wants implemented—is a curious definition of aggression by the UK. My hon. Friend usually supports UN decisions and I would have thought he would want to see them properly and effectively implemented, and see the UK Government play their part in the international community in that achievement. My hon. Friend has asked me before about the absence of weapons of mass destruction on certain sites. If he studies carefully the material so cogently set out yesterday by Secretary of State Powell at the Security Council in New York, he would know why weapons of mass destruction are no longer at the sites indicated last September. They have been moved by a Government determined not to co-operate with the UN.

Angela Watkinson: Will the Secretary of State confirm that, at a time when this country might be on the brink of war, the Ministry of Defence has spent £40,000 on a survey to identify sexism in the Army—and that the term "girl" has been criticised, despite men in the Army being referred to as "boys"? Does the right hon. Gentleman agree that that is not just a preposterous waste of taxpayers' money, but that any woman who is so sensitive as to worry about such politically correct nonsense has no place in the armed forces?

Geoff Hoon: I am sure that the House is grateful to the hon. Lady for pointing that out at this particular time. I will certainly have the matter investigated.

Neil Gerrard: Ministers have said that they will not feel bound by what is, in their opinion, unreasonable use of the veto on a further Security Council resolution. Where in the UN charter is there provision for any member state to choose to ignore a veto? If my right hon. Friend believes that this country and the US have that right, why should any other country pay any attention in future to use of the veto by the UK or US—on this or any other issue?

Geoff Hoon: We have not reached that stage. I invite my hon. Friend to await the outcome of the further report by Dr. Blix to the Security Council and whatever resolutions, discussions and votes may follow.

Richard Younger-Ross: The Secretary of State ought to sort out his arguments about whether it is a matter of arrangement or surprise that the House cannot have a vote. Will the right hon. Gentleman return with a statement on humanitarian aid, but say today what will be the RAF's contribution?

Geoff Hoon: Alongside the military preparations—some of which I have set out today—a determined effort will be made to ensure the safety and security of the Iraqi people, with whom we have never had any quarrel. People who have been threatened by Saddam Hussein deserve better protection from the international community, which we will seek to provide.

Claire Curtis-Thomas: I hear the Secretary of State's reassuring words about humanitarian aid, but we need more. Aid agencies in the region advise that there has been no increase in the supplies necessary to protect the population from the same weapons that our troops may face. Many of us desperately seek reassurance that such supplies will be available in equal measure.

Geoff Hoon: A determined effort is under way to ensure that, alongside effective military preparations, provision is made for the kind of response that may be required following any action, to ensure the rebuilding of Iraq's civil administration so that it will be in a position to take its rightful role in the international community.

Malcolm Savidge: Saddam almost certainly has far fewer biological or chemical weapons and missiles than in the past. The Central Intelligence Agency reckons that currently, he is only likely to use or pass them on to others if attacked. Intrusive inspections can check on Colin Powell's allegations while both constraining and disarming Iraq. Saddam's positive co-operation with disarmament—

Mr. Deputy Speaker: Order. The hon. Gentleman must not make a speech. He must ask a question—quickly.

Malcolm Savidge: Is the relentless rush towards a pre-emptive war dictated less by an immediate threat than by US domestic politics and military and climatic considerations?

Geoff Hoon: It is dictated by Iraq's failure to co-operate properly with the decision of the international community. My hon. Friend referred to intrusive inspections, but clearly the obligation is on Iraq to co-operate with the inspectors. There will be no need for intrusive inspections if Iraq co-operates. The evidence is clear—Iraq is not co-operating with the will of the international community.

John Smith: As well as paying tribute to our deployed forces, does my right hon. Friend acknowledge the implications of today's decision for support units such as the Defence Aviation Repair Agency, which will have to meet a big challenge—and will do so professionally? Is he satisfied that he will be able to charter the number of civilian aircraft and other heavy lift needed? Is it true that other European countries are currently busy chartering from the same source?

Geoff Hoon: I had the opportunity recently to meet work force representatives from DARA and I pay tribute to the excellent work that that agency does on behalf of our armed forces and the country. As to chartering civilian aircraft, I am confident that there will be sufficient availability, although, as my hon. Friend indicated, a number of countries are interested in chartering similar aircraft at this time.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. We must move on. We will doubtless return to this topic.

Points of Order

Paul Tyler: On a point of order, Mr. Deputy Speaker. May we, through you, ask Mr. Speaker to make representations on behalf of the House on the censorship of e-mails received in this building? It has been drawn to my attention that were I to quote from the British Board of Film Classification guidelines in this Chamber and that was reported in Hansard, if that report were electronically sent back to the House, it would be automatically be blocked. Similarly, if I were to quote from the Sexual Offences legislation and that was reported by Hansard, published and communicated by e-mail, it would be blocked under the present system of censorship.
	I ask you, Mr. Deputy Speaker, to examine that issue in relation to free speech in this Chamber and to ask the House authorities to review principles and practice in respect of the present arrangement. Clearly, censorship has gone too far and the nanny state is into overkill.

Mr. Deputy Speaker: The clear intention behind the move to block incoming e-mails was to protect our staff from some extremely offensive material that some members of the public are prepared to transmit. In light of the hon. Gentleman's remarks, I will ask the appropriate authorities to consider the matter again, to ensure no nonsense is perpetrated in the operation of what is intended as a sensible and sensitive approach to the feelings of our staff.

Glenda Jackson: On a point of order, Mr. Deputy Speaker. On 29 January, the Prime Minister categorically stated:
	"The decisions whether to commit troops . . . are taken by our Government, our House of Commons and our country."—[Official Report, 29 January 2003; Vol. 398, c. 872.]
	That statement was totally refuted today by the Secretary of State for Defence. Either that shows a basic shift in Government policy that, again, the House has not been privileged to examine or the Secretary of State does not know what the Prime Minister is thinking. Surely that warrants some kind of statement, given that the House is about to engage in a war against Iraq that the majority of people of this country regard as illegal and immoral, and which the House has had no opportunity to debate on a substantive motion.

Mr. Deputy Speaker: The hon. Lady knows that that matter is not for the Chair but for debate. I have allowed her remarks to be placed on the record but her experience in the House will lead her to appreciate that there are other channels through which to convey her strong feelings on the matter.

Orders of the Day

Electricity (Miscellaneous Provisions) Bill

Considered in Committee.

[Sir Alan Haselhurst in the Chair]
	 — 
	Clause 1
	 — 
	Expenditure relating to British Energy P.L.C.

Vincent Cable: I beg to move amendment No. 12, in page 1, line 5, leave out paragraph (a).

Alan Haselhurst: With this it will be convenient to discuss the following:
	Amendment No. 10, in page 1, line 6, at end insert—
	'in relation to qualifying activities'.
	Amendment No. 14, in page 1, line 13, at end insert—
	'( ) Nothing in subsection (1) shall permit the Secretary of State to incur expenditure on the management, transportation, storage or reprocessing of nuclear waste materials.'.
	Amendment No. 15, in page 1, line 13, at end insert—
	'( ) Nothing in subsection (1) shall permit the Secretary of State to enter into any arrangement having the effect of transferring financial liability for the storage or reprocessing of nuclear waste material to the Exchequer.'.
	Amendment No. 3, in page 1, line 20, after 'loan', insert 'or'.
	Amendment No. 4, in page 1, line 21, leave out 'by any other means'.
	Amendment No. 11, in page 2, line 3, at end insert—
	'"qualifying activities" shall be limited to the financial liabilities generated by a British Energy company prior to 4th September 2002, to a maximum of £2,100 million'.
	Amendment No. 26, in page 2, line 8, at end add—
	'(4) No money shall be made available by the Secretary of State to a British Energy company for the purposes of reprocessing spent nuclear fuel, or that would have the effect of displacing the cost of reprocessing spent nuclear fuel from the general expenditure of a British Energy company.'.
	New clause 1—Historic liabilities—
	'Expenditure under the provisions of this Act shall be restricted to the historic liabilities of British Energy plc as at 4th September 2002.'.

Vincent Cable: I am delighted to begin the Bill's consideration in Committee. I am conscious of the fact, however, that we have very limited time. The time for discussion in Committee has been concertinaed, and it has now been further reduced by the statement on Iraq, so I will try to be brief and to the point. I am also conscious of the fact—we had strong guidance about this from the Chair on Second Reading—that this is a narrow discussion; it is not about the general merits and demerits of nuclear power, and this series of amendments will narrow the debate even further.
	I wish to focus on three issues, the first of which is captured in amendment No. 12 and relates to the lively debate in government and the European Commission and what should be a lively debate in Committee about the relative merits of solvent restructuring versus administration. We have tried to capture that issue in the amendment by proposing the deletion of the relevant subsection.
	Secondly, we have tabled amendments Nos. 10 and 11, by which we seek to limit the Government's commitment to their decommissioning liabilities. That is an attempt to address the issue, which is replete in the Bill, of very large, open-ended financial liabilities. Whatever we feel about nuclear power or British Energy, we wish to try to provide some discipline and limits on those financial commitments.
	Thirdly, we have a couple of amendments—to which I hope that my hon. Friend the Member for Hazel Grove (Mr. Stunell) will speak—that relate to the link between British Energy and BNFL and our concern that BNFL's losses and British Energy's problems will simply become interchangeable in a very opaque way. The purpose of those amendments is effectively to create a financial firewall between the two undertakings.
	Let me address most of my remarks to the very live issue: the relative merits of administration as opposed to solvent restructuring. When I first publicly raised the idea of administration, I vividly recall that it was regarded as being somewhat insane, but I subsequently discovered that my wing of the lunatic asylum is inhabited by the European Commission and, if we are to believe the press, by the Chancellor of the Exchequer, too. It would appear that there are great doubts in government about whether solvent restructuring is the best option for the British taxpayer.
	Perhaps I can put the discussion in context by reading the relevant quotations from the Secretary of State for Trade and Industry. In her first statement, which was very well balanced, she made two keys points that frame the whole discussion. She said:
	"whatever happens"
	—administration or solvent restructuring—
	"nuclear power stations will continue to generate electricity and will continue to employ staff. Pensions entitlements will be met. Trade suppliers will be paid. Customers' lights will stay on."—[Official Report, 28 November 2002; Vol. 395, c. 490.]
	We are not debating safety issues or security of supply. The Secretary of State has made it very clear that those aspects would be protected under an administration arrangement. She went on to say:
	"Let me make it clear that there is no real difference in the cost to the taxpayer between the solvent restructuring that we are giving the company a chance to put into place and falling into administration".—[Official Report, 28 November 2002; Vol. 395, c. 492–93.]
	The Government's own starting point is that the two approaches are not fundamentally different financially, but it is very clear that a debate is going on about them.

Michael Weir: Does the hon. Gentleman have any observation to make on the last point about the difference in cost? If, as is proposed by the Bill, the financial ceiling is removed, is there not the danger that British Energy will become a sink down which money is poured?

Vincent Cable: Indeed, that is very much my view, and I hope to develop it in more detail. However, that concern is shared not just by Liberal Democrat Members and even by Conservative Members, but in many reaches of the Government. There was a discussion in The Business newspaper on Sunday about the debate that is going on in Whitehall. As none of us has had that kind of information, one must assume that it has some accuracy. It said:
	"Securing bondholders and creditors' agreement to the restructuring would represent a victory for the Department of Trade and Industry and the energy minister, Brian Wilson over the Treasury."
	It has been made very clear that the Treasury, which has done its own cost-benefit analysis, is very sceptical about whether solvent restructuring is the best deal for the taxpayer. It concludes that narrative by saying:
	"But the DTI insisted British Energy should be kept in the private sector."
	So I shall briefly assume the mantle of the Chancellor of the Exchequer, rather than that of Liberal Democrat spokesman, and argue what I think he would argue if he were here defending his corner against the DTI. He would make the point that, if solvent restructuring goes ahead, there are clearly some financial benefits to the Government, and those benefits have to be set against the costs in a fair-minded way.
	The Government would derive two benefits from solvent restructuring. First, £275 million in new bonds will be produced by the restructured company. That is new money; it is a positive addition of cash, which the Government would not have got if the company had gone straight into administration. When the issue was raised by the Select Committee on Trade and Industry, the Minister for Energy and Construction was asked to explain the assumption that the bonds can be successfully floated. That is the problem. I do not know whether they can be floated, but we are in a difficult market environment. There are certainly question marks over whether that is deliverable.
	The second and most contentious benefit relates to the fact that, under the restructuring deal, the Government will be able to attract into the company, by keeping it private, 65 per cent. of free funds—in other words, net cash flow. Those funds would not be available to the company if it went into administration. At the optimistic end of the range of forecasts, we are talking about £100 million. I shall say in a moment why I think that that figure is wildly optimistic.

Jonathan Djanogly: The hon. Gentleman mentions the marketability of the bonds, which was indeed touched on by the Select Committee. Of course, the point is that marketability depends on the market. The private sector does not know what the market is because the White Paper has not been published. That is one of the problems that we have in considering the Bill at this time.

Vincent Cable: The hon. Gentleman is absolutely right. There is massive uncertainty about whether the 7 per cent. coupon yield that, I think, has been offered is sufficient to overcome that problem, but I am not an expert in securities markets. At the very least, there are doubts. Equally, there are doubts about whether the 65 per cent. free funds will be available. The economics are very questionable indeed.
	British Energy, which has been making enormous efforts to improve the productive efficiency of its units, is currently producing at about £18.50 a megawatt-hour. That is its production cost, but for the additional cash flow to materialise, it will need to get its costs down by about £2 a megawatt-hour. It will need to achieve an extra 10 per cent. in efficiency to get the margin to generate the cash flow. I have seen no indication, other than a hope, about how that increased efficiency will be achieved. It is assumed that the plants will work flat out and at optimal efficiency and that the problems that have occurred at Torness and elsewhere will not arise. It is an heroic assumption and, if the assumptions are not realised, the benefit will not be maintained. Those are the two elusive financial benefits that may come from the solvent restructuring solution.
	The Government will have to contemplate paying out money that would not be paid out in the administration solution. Other factors also have to be taken into account. There is the balance of the free funds—the 35 per cent.—and, more important, there will be a commitment to continue paying interest on the bonds, which will amount to about £50 million a year. That money will have to be paid to outstanding creditors in the private sector, which would not happen in administration.
	If we put the two elements together, we can see that the case is finely balanced and that there is a lot of uncertainty. However, in an uncertain environment, several compelling reasons arise for pursuing administration. We are dealing with a private company that has manifestly failed in the past. I know that it has a new chief executive who may turn things round. However, we are being asked to believe that, despite their record of failure, the same company and the same chain of management can deliver spectacular improvements that have not been seen before.
	If the company went into administration, we would not have the problem that the restructured company will have—that of having to justify its treatment relative to its competitors. It is not yet clear that the restructuring proposal will get through the European Commission. Some of Mr. Monti's comments suggest that the Commission does not regard the Government's proposal as acceptable state aid, although we do not yet know the final outcome of that. He has certainly made it clear that the Commission's assessment is that administration is the preferable solution. With administration, the Government would not be committed—as they will be under the present proposals—to open-ended financial support for this private company.
	The Government keep reassuring us that their £650 million loan is secure, that they have first charge on all the assets, that the money will be paid, and that the taxpayer has nothing particular to worry about from the bail-out. They keep telling us that and, in purely legal terms, they may well be right. However, the Government's optimism is belied by other things that they are doing. As we know, their submission to the European Commission had a much higher ceiling level, and this Bill has an unlimited ceiling.
	Let us assume that solvent restructuring is agreed by the City and the Commission and that it goes ahead. What will happen if the price of electricity falls? British Energy is already losing money with the financial terms under which it is required to operate. Its costs, including capital charges, are well above the market price. However, what if the price falls further? We know that the industry has a lot of excess capacity. None of that is being removed by British Energy, which will be required to operate flat out to meet its financial objectives. We could well be coming into a difficult economic environment. We do not know what will be the economic consequences of a war in Iraq. The effects on the economy and the price of electricity could well be to drive that price down much further. There will then be open-ended liabilities that the Government will be required to pay to this private company. The £650 million—or some other form of assistance—could well be the minimum rather than the maximum.

Mark Field: rose—

Jonathan Djanogly: rose—

Vincent Cable: I will finish my point and then take an intervention.
	Whatever we think about the controversial issue of nuclear power, if we take all those factors into account, and if we take into account the body language that we see in Whitehall Departments—notably the Treasury—administration would seem to be a more prudent solution for the taxpayer than the route that the Government are taking.

Mark Field: The hon. Gentleman has rightly pointed out the commercial risks. None the less, it is fair to say that commercial risk is inherent in this. The City of London, although it would take account of his concerns, would be able to price things accordingly. Will he say a little more about the risk that the whole financial assistance package falls foul of European Union law? That was not discussed in any great detail on Second Reading and the Minister for Energy and Construction has not given a full analysis of those concerns.

Vincent Cable: For several reasons, the proposals may run into difficulties because of the need to consider competitors. We await the ruling of the European Commission. We know that some private creditors, such as Barclays, have taken the view that administration would be no worse and would probably be better than the Government's proposal. Those creditors may well take court action on that point. There is the Greenpeace legal case as well. For any one of a variety of reasons, competitors may well be able to stop the process.
	I will conclude now—remembering that I started my speech by invoking the issue of time. I want just to refer briefly to the other amendments. My points will flow from the discussion that we have just had.
	Amendments Nos. 10 and 11 seek to limit the extent of the financial liabilities that the Government are undertaking. They try to limit the liabilities to decommissioning liabilities. We would all accept, given the Government's position, that the taxpayer will have to assume decommissioning liabilities in some form. Years ago, it was hoped that the private sector would be able to finance nuclear power and its decommissioning liabilities, but those hopes seem to have gone. There is little prospect of them being realised. We concede, in these two amendments, that the Government will have to make a substantial increase in their contribution to nuclear decommissioning liabilities. However, we say, "Why not leave it at that? Why do the Government need extra financial provision?" The Minister has always forcefully said that, even in the event of the industry going into administration, the economics of nuclear power are clear because the operating costs justify keeping the industry going. A sane administrator would keep the industry going because the operating costs mean that there would be a bit left over for interest obligations, if not all of them. Why, therefore, is there a need for additional financial support beyond the decommissioning assistance?

Stephen Ladyman: Has the hon. Gentleman not touched on the reason why the Government are right to try what they are trying? Under administration, the Government would not be able to avoid decommissioning costs. Under successful solvent restructuring, there is at least a possibility that, in the long term, the industry could do what it was always intended that it would do, and pay the decommissioning costs itself.

Vincent Cable: The hon. Gentleman is right. The upside of the story is that, under solvent restructuring, private companies would make a modest contribution to decommissioning costs. If that part of the package realised its full potential—which is, I believe, around £100 million—that would be a positive element of restructuring. I accept that that would go on the plus side of the balance sheet, but we have to consider the overall balance.
	We are dealing with very complex financial calculations and none of us here is qualified to make professional judgments. I urge now, and will urge in amendments to follow, that before the Bill has completed its passage, we must build in some mechanism whereby auditing authorities, and the House through its Committees, can consider properly the economics and the financing arrangements. At the moment, those arrangements are highly opaque. That obscurity is one of the most unsatisfactory parts of the Bill.

Paddy Tipping: I am pleased to follow the hon. Member for Twickenham (Dr. Cable), who rightly concluded that this is a complex matter. He would like more transparency, and so would we all. He offered a range of possibilities for the direction that the energy market will take. He wondered whether electricity prices would fall as a result of war. I suspect that they would go up rather than down. He also spoke about the range of liability costs over the coming years.
	I want to be more practical and more down to earth than the hon. Gentleman. The rescue package will cost the Government a great deal of money. These amendments seek to cap or restrain those financial consequences. Can my hon. Friend the Minister tell us whether the money is there to do the job? In the short term, there is a £650 million loan, with contributions of between £150 million and £200 million over 10 years, amounting to something like £2.1 billion. My impression—I put it this mildly—is that that clears out the Department of Trade and Industry energy budget in one stroke. Many of the issues that we have been discussing relate to the consequences and the direction of future energy policy and the cost of this rescue package, however it is done, over the next 10 years.
	The White Paper will be published shortly—in the spring, or at the end of February or the beginning of March—and one of the things that many Members wish to know is the consequent cost of that in relation to the White Paper. My hon. Friend the Minister, who has been very good to me over many years, will know of my long-standing interest in other sources of energy, particularly coal. Is the £60 million that has been set aside for the coal industry investment aid scheme starting this year still available, or has it been cleared out to give to British Energy?

Crispin Blunt: It is a pleasure to follow the hon. Member for Sherwood (Paddy Tipping), whose expertise in energy matters is known to all hon. Members. I am grateful to the hon. Member for Twickenham (Dr. Cable) for setting out the broader picture so well. I do not intend to repeat that exercise but simply to pick up one or two points that he made.
	First, it might be helpful if the Minister were to let us know whether there is any new formulation in relation to when the White Paper is due. According to the last one, it is due at the end of February or the beginning of March. If things have moved on since—it has been more than 10 days—it would be useful to know.

Brian Wilson: Before the summer.

Crispin Blunt: I am now tempted to ask which months make up summer, but I might trespass on your patience, Sir Alan, if I pursue that line.
	The hon. Member for Twickenham rightly drew attention to the fact that this whole debate is now about the amount of assistance that the Government will give British Energy, behind which sits the whole question of state aids and the European Union. Even if the Government are successful in putting together the rescue package with British Energy, it is highly likely that when we arrive at the summer of 2004, the competition commissioners will, properly, unpick the whole thing.
	There cannot be a case for giving an unlimited amount of money to one company in the electricity sector, particularly when the rest of that sector is under such enormous pressure. I am certain that at least one company will pursue the matter vigorously, along with environmental groups, with the competition authorities. That is why the question of whether this Bill is necessary at all remains.
	The hon. Member for Twickenham made it clear—repeating what is now accepted across the House—that the plants will continue to generate power, whatever condition they end up in: administration as an independent private company; a private company with the Government rescue arrangement; or owned by the Government. No one disputes that they will continue to generate power, and, on my understanding of their financial situation, they will continue to generate cash because the costs will now have been discounted and most of their liabilities, of one form or another, will have been taken on by the Government under whatever arrangement we reach.
	I take issue only with the hon. Gentleman's suggestion that even the Conservatives were now interested in how much money was going to be put into the company. I cede to no one in the House the defence of the taxpayer's interests—the Conservative party has a proud record of doing that. A decade ago, the situation for nuclear energy was slightly different. I am sorry that the hon. Member for Bolsover (Mr. Skinner) is not in his place, as the unfortunate leadership under which the National Union of Mineworkers found itself labouring had much to do with creating the environment of the late 1980s in which the vigorous support for nuclear energy perhaps went beyond the economic case.
	I have tabled new clause 1 and amendments Nos. 4 and 5. New clause 1, which is similar to and has the same design as amendments Nos. 10 and 11 tabled by the hon. Member for Twickenham, would limit the liabilities assumed by the Government to the historic liabilities. We have tabled a figure of £2.1 billion, which is the figure for the back-end fuel costs in the April report and accounts for the company, to which the taxpayer's exposure would be limited.
	Amendment No. 12 was tabled by the hon. Member for Twickenham and deletes the provision for assistance to the company. Will the Minister explain whether such legislation is absolutely necessary to assist the company were it to go into administration? I do not believe that it is necessary, but I would be grateful for the Government's view.
	Amendments Nos. 4 and 5 are designed to tighten up the ways in which the Government can give financial assistance to British Energy by removing the phrase, "by any other means", which seems to be drafted widely. Plainly, the drafting covers any way in which the Government could give money to British Energy. Some perfectly proper ways exist in which they can assist British Energy without having to resort to "by any other means". One is to ensure that if we have something that can properly be called a climate change levy, it is not paid by nuclear generated electricity. Equally, its business rates could be assessed on the same basis as those of any other power generating company rather than under the arrangement introduced in a statutory instrument passed in 2000. We are looking for answers to those questions. Why should the provision on the Government's form of support be drafted so widely? Why cannot the liabilities be limited to the historic liabilities at 4 September 2002 or to £2.1 billion, which is our formulation?
	Finally, I want to address the point raised by the hon. Member for South Thanet (Dr. Ladyman) in an intervention on the hon. Member for Twickenham: that the only case for the Government to rescue British Energy in the interests of the taxpayer is that the company may be able to trade out of its current position. The Government would therefore get a return on their investment in rescuing British Energy. Of course, the assets of British Energy—the power plants—have a value in the market. If the Government take a title to the liabilities, they will have first charge, should the company go into administration, over the money that would be raised from the sale of those assets. Will the hon. Gentleman reflect—I know that he is a supporter of nuclear energy—on what will be the future of the nuclear generating industry in this country if it has to be rescued in this way by the Government or if it ends up in public ownership? I think that that would be its death knell.

John Bercow: Will my hon. Friend tell the Committee whether, in seeking to cap the cost to public funds of meeting those liabilities, and thereby exercising his and the Opposition's fiduciary responsibility to the taxpayer, he is purely motivated by intellectual considerations or is properly responding to representations from other hard-pressed power suppliers?

Crispin Blunt: There have been representations from the renewable energy sector in particular—Ecotricity is one company that springs to mind. I hope that my arguments are also sustained by intellectual credibility. The rest of the electricity industry has ducked below the parapet somewhat, and there seems to be a certain shamefacedness about the consequences of emerging into the open to challenge the Government on this rescue strategy. I think that the industry is waiting to see, perhaps hoping that it might not come to this after all and that the Government will not end up taking such a position in the electricity market and so disrupting it for other electricity generators.
	One or two companies made some noises in September when the loan was first made, but they have gone rather quiet since then. It would be helpful to all of us in illuminating the debate as time goes on, not just this afternoon, if the Electricity Association and the individual companies were prepared to be rather more clear about exactly what their position was.

David Chaytor: I want to speak specifically about my amendment No. 26, but first I wish to say that I was very sorry not to be here for Second Reading. However, I did read the text of much of that debate in Hansard, and it occurred to me that, on this difficult and complex problem confronting the Government, those who argued for the Bill did not divide into either supporters or opponents of nuclear energy. There was an enormous ambiguity in the Government's solution, and so it attracted supporters from both sides. Some opponents of the further development of nuclear power were happy to support the Bill on Second Reading precisely because they thought that it would hasten the end of nuclear power, and the supporters of nuclear power were happy to support it precisely because they thought that it was the only way to ensure a continued future for nuclear power.
	That ambiguity is also present with regard to the amendment, which argues that, under any future financial arrangements whereby the Government put public funds into British Energy, those funds should not be deployed to sustain the reprocessing of spent nuclear fuel. Both the opponents and proponents of nuclear energy should support the amendment.
	The traditional environmental lobby, in which I broadly include myself, feels that the days of nuclear power are numbered and that, whatever happens to our overall energy mix, nuclear will play a significantly smaller role until or unless we finally discover the secrets of nuclear fusion. We must always ensure that that possibility remains open.
	For those of us who are broadly opposed to the further development of nuclear power in its current form, the question of the reprocessing of spent fuel is hugely important, because reprocessing is enormously expensive. We all know the complaints that British Energy made, I think two years ago, about the excessive amount it had to pay to British Nuclear Fuels Ltd. for reprocessing spent fuel and the savings that it thought that it could make if it could store its spent fuel.
	The economic arguments against reprocessing are extremely strong. It follows, therefore, that those who want a future for nuclear power should understand that its likelihood is strengthened if reprocessing spent fuel is taken out of the equation. The cost to any future British Energy, whether publicly owned or restructured solvently, of storing its fuel would be significantly less than that of reprocessing. As I recall the figures, the savings could be £100 million to £200 million per annum for the next 10 years—a not insignificant amount.
	I understand that there have been discussions between BNFL and British Energy. I recall from the Library briefing on the Bill that my hon. Friend the Minister had said as late as December that those discussions had not been concluded, and that there was no agreement about what the future basis for reprocessing contracts might be. It would be very helpful if in his reply my hon. Friend could tell us the latest information on the renegotiation of contracts.
	Whatever the economics, and whatever the price of reprocessing spent fuel, it is important to understand—

Martin O'Neill: Has my hon. Friend made any calculation of the cost of discontinuing reprocessing in the light of the expenditure that has already been made for the plant? How much would it cost to mothball or dismantle it? How much would it cost BNFL if these contracts, which have already been signed and which one would imagine are still in force, had to be written of?

David Chaytor: I have not made such calculations, but others have. Now that British Energy is no longer a private sector company, and may not continue as a private sector company, the whole question of the space within the Government accounts where the cost of reprocessing appears is quite different. This is a strong argument for ending reprocessing, because the Government now, both as the sole shareholder of BNFL and in their role in controlling the future of British Energy, are in a stronger position to determine what the future will be.
	Certainly, in terms of the comparative costs of reprocessing as against the storage of spent fuel, there is no dispute: storage is significantly cheaper. That is why in nuclear power stations across the world, 85 per cent. of spent fuel is stored and not reprocessed. That is why the United States decided in 1977 to end reprocessing. The economics are clear, and they impinge directly on the future liabilities of the British taxpayer, which lie at the heart of this group of amendments.
	I should like to speak briefly about the reason for our historic commitment to reprocessing and how the conditions in which the reprocessing decision was taken no longer apply. Forty years ago, the prime purpose of developing nuclear energy was to generate plutonium to build up our stockpiles of weapons during the early years of the cold war. The decision to reprocess was taken when uranium was considered to be in short supply, or to be a fuel that would become so expensive that we needed alternatives. Those days have gone. Uranium is still there and is comparatively cheap.
	When the decision was taken, there was no serious debate about the technologies of storage. In the early years of nuclear energy, some fuel had been stored. In fact, some fuel from the Magnox reactors was stored and continued to be dry-stored at the Wylfa reactor. My argument is that the decision to develop a reprocessing industry in Britain many years ago was arbitrary. It could have gone differently. It was based on circumstances that no longer apply and has not been followed by most countries that have a nuclear power industry. We have trapped ourselves into that historic mistake.
	The collapse of British Energy, as with so many crises, gives an opportunity to re-evaluate the fundamental assumptions that have determined our thinking for many years. There must be such a re-evaluation. The amendment's purpose is to argue that now, whatever people's views about the total amount of public money that should go into the rescue of British Energy, there can be no dispute that none of it should go into carrying on the reprocessing of spent fuel. Discontinuing it would be cheaper for the taxpayer and for whatever the future form of British Energy may be. It would also be safer in terms of the environment and certainly in terms of the current international problems with proliferation. I cannot be the only Member who sees a contradiction between our view of what is happening in North Korea with the starting up of nuclear plant to generate plutonium, and the fact that that is exactly what we have been doing for the past 40 years.

John Horam: I want to make a point that I have made in similar debates, although without any success. A Treasury Minister should be present because we are talking about substantial sums of public money. The hon. Member for Twickenham (Dr. Cable), who fluently and ably moved the amendment, tried to remedy that by proposing that he should don the cap of the Chancellor of the Exchequer. I think Lloyd George was the last Liberal Chancellor, so there is a distinguished lineage. However, he is not likely to be Chancellor and his brave effort, sadly, failed.
	No doubt the Minister would not entirely welcome the presence of a Treasury Minister. There will have been sensible arguments between the Department of Trade and Industry, the Minister and the Treasury. We are entering a period in which the Government's finances look distinctly rocky and the Bill paves the way for a further payment. In addition to the £5 billion or so that we may spend on a war in Iraq, which we heard about earlier, there are other considerable outlays that could not have been foreseen when the Department's budget was originally suggested. The House must take its role as the guardian of taxpayers' money seriously, as my hon. Friend the Member for Reigate (Mr. Blunt) said.
	The hon. Member for Sherwood (Paddy Tipping) asked whether the deal has cleaned out the Department's energy budget. Presumably, like every other Department, the DTI drew up its public service agreement with the Treasury some time ago under the spending agreements, to which the Chancellor attaches great importance, and there was a provision for energy. Does the scheme clear out the budget or will there be a drawing down from a separate contingency fund? I shall be interested to hear what the Minister says about that.
	It would also be useful to have a Treasury Minister present because, as the hon. Member for Bury, North (Mr. Chaytor) said, we have an opportunity to re-evaluate the differing roles of energy suppliers in the total picture. We know that because the Minister is producing a White Paper, perhaps in the early summer, and the whole energy debate is at a critical point. In many ways, it is a great pity that British Energy has reached its present pass before the Government's views on how the picture may evolve have been made public. There will be differing expenditure consequences as a result of the, hopefully different, choices that the Government may make while they deliberate on the White Paper. I, too, want greater support for renewable energy. That will cost the Government quite a bit, at least in the initial stages. I do not think that renewable energy can solve the whole problem, but it can make a contribution, so I hope that the Government give it extra support.
	For all those reasons, I should have liked a more comprehensive assessment of the financial consequences of the measure set against the background of the energy debate and deteriorating public finances generally.

Michael Weir: I support the case made by the hon. Member for Twickenham (Dr. Cable) and will support his amendments if he presses them. He made cogent points about the financial aspects of British Energy and there is confusion about the Government's strategy for it. It is unfortunate that the White Paper has not been published.
	The hon. Member for Bury, North (Mr. Chaytor) made a good point about the difficulties faced by both pro- and anti-nuclear energy interests. Had the money for British Energy been linked to a run-down and decommissioning of plants, many of us would have enthusiastically supported the plan, but that is not the case. What is the strategy for British Energy? Is it linked to building new nuclear power plants? Is that why the Government wish to keep it in the private sector and keep it going as a non-state company, because we would oppose that?
	It has been stated that nuclear plants cannot be shut down overnight. We all accept that. The policy pursued by the Scottish National party is that all nuclear plants should be shut down at the end of their economic or technological life. We recognise that it takes years to phase out nuclear power plants and that they will continue to operate during that time, but most plants owned by British Energy are due to be decommissioned within the next 30 years. In Scotland, Hunterston is due to shut by 2030 and Torness by 2024. So why put huge sums into British Energy? If we are going to decommission existing stations, would it not make more sense to allow it to go into administration and gradually run it down within that period as the plants come to the end of their technological lives?
	Even the most enthusiastic projections for British Energy do not predict that it will be able to make anything other than a minimal contribution to its liabilities over the remaining lifetime of the plants even if they run successfully and at full capacity, which is a major assumption given the difficulties recently experienced at some plants that have had to shut down. The shut-down earlier this year at Torness contributed to the financial difficulties in which British Energy now finds itself.

Jonathan Djanogly: As I understand it, if we take out the start-up costs, such companies run efficiently and around profitability, which is the opposite of what the hon. Gentleman claims.

Michael Weir: I do not know that it is. Both start-up and run-down costs are associated with the company. The problem is that the industry, partly because of its historic liabilities, is uneconomic, so the energy that it produces is uneconomic. Bonds were mentioned and the hon. Member for Cities of London and Westminster (Mr. Field) said that the City would set its own level if they were issued. But the Secretary of State noted in her statement on 28 November that British Energy attempted a bond issue in the United States in the summer that was unsuccessful. We must question whether money could be raised in the private sector.
	Whatever route we take—whether British Energy remains in the private sector or is effectively renationalised—the taxpayer will pick up the bill. There is little sense in going through the restructuring plan unless the Government intend to expand nuclear power.

Martin O'Neill: The hon. Gentleman is working on an assumption that he has not explained or thought through. He seems to think that the maintenance costs and the safety obligations diminish as a power station reaches the end of its life, but the opposite is true. We must have proper safety at great expense right up to the moment when the power station closes. There is never a taper. The idea that the financial requirement will diminish is wrong because it will be roughly the same, allowing for inflation, right up to when we say that there is no more need to put fuel rods into a station. That is why substantial sums need to be provided. It does not preclude investment or require investment in new build.

Michael Weir: That makes no difference to the fact that the taxpayer will pick up the tab whichever way we go. It does not make any difference whether the taxpayer pays to keep British Energy going in the private sector or in the public sector by effectively renationalising it. If the plants are to close anyway, that cost has to be met. There is no reason to keep it in the private sector unless there is a prospect of expanding nuclear power.
	A possible problem with the European Union has been mentioned. In an e-mail this afternoon—perhaps other hon. Members also received it—Greenpeace reassesses the European Commission's decision, although I am sure that the Minister will not accept what it says as gospel. Greenpeace says that the decision
	"underlines the requirement that aid drawn down from the loan facility must be the minimum necessary amount to keep the firm in business for the rescue period".
	In other words, if British Energy became insolvent or went into administration, the amount required for the minimum safety level would be less than that required if it continued trading, as funds for creditors, bondholders and others would be realised, thus reducing the amount for essential safety and security. More public money would have to go in so, from the taxpayer's point of view, administration is the cheaper option.

Stephen Ladyman: Has the hon. Gentleman not demonstrated why this group of amendments is unnecessary? The European Commission is likely to rule that any amount of money put in by the Government has to be the minimum amount necessary. If the Government exceed that, it would be illegal under European law. We therefore do not need the amendments, which tie the Government's hands.

Michael Weir: The minimum amount will vary, depending on whether the company stays in the private sector or goes into administration. If I understood the hon. Member for Twickenham correctly, the preferred option in the amendments is for the company to go into administration. That would be the best deal for the taxpayer, and I believe that it is more likely to ensure the eventual decommissioning of those stations and stop the expansion of nuclear power. I therefore support the hon. Gentleman's amendments.

Andrew Stunell: I want to draw the attention of Committee members to amendments Nos. 14 and 15, which are similar in intention to amendment No. 26, which was tabled by the hon. Member for Bury, North (Mr. Chaytor). Our amendments aim to prevent the creation of a hidden or circular subsidy between BNFL and British Energy. A number of Members have already asked whether British Energy is capable of making money if historic costs and/or future liabilities are written off. That debate clearly requires a good deal of technical exploration, because the figures can be interpreted differently. At the beginning of 2002, British Energy's production costs were about £20 a megawatt-hour, but by the end of last year, they were down to £18.50, compared with a wholesale price of about £16 a megawatt-hour. The company was apparently running at a loss all last year, but a lot depends on future costs and prices. Amendments Nos. 14 and 15 do not address that directly.

Crispin Blunt: We are obviously entering an area in which Members cannot claim to be experts. In its annual review, British Energy claimed that its operating costs had already been driven down to £16.70 a megawatt-hour, and said that it aimed to get them down to £16 a megawatt-hour. When I visited its plant at Heysham, I was told that that included depreciation costs, which suggests that when liabilities and depreciation are taken away, the costs are significantly less. British Energy therefore generates cash now, and if the electricity price returns to the long-run cost of generators, it would make a significant amount of cash.

Andrew Stunell: I am grateful to the hon. Gentleman, who has underlined the point that the figures are open to interpretation. When one is looking at costs, as anyone who has attempted to run a business will know, the final figures depend on what is included and excluded. I do not base my case on any particular interpretation of prices, but simply wish to make the point that the rescue package—if that is what it is—must be based on the best available information. Some information could be seriously affected by the potential cross-subsidy between BNFL and British Energy in the reprocessing contracts. The hon. Member for Bury, North has already referred to that, and there have been difficult negotiations between the two companies over the past 12 months. In fact, the failure of negotiations was the trigger for British Energy to approach the Government and make it clear that it was in grave financial difficulties.
	We must remember that BNFL is a wholly Government-owned enterprise which, financially, is on the brink. It could not afford to release British Energy from its contracts—had it done so, that would have pushed it over the brink, rather than British Energy. There are therefore two companies on the brink tussling over a contract. How convenient for the Government and perhaps the Department of Trade and Industry if negotiations between those two companies did not result in a reduction in the cost to British Energy but in an increase in the price paid for reprocessing. Suppose it went up from £250 million to £350 million or £500 million—there is nothing in the Bill to prevent the money injected into British Energy from being used to support that contract, whatever value the negotiations achieve. We have tabled subsequent amendments that address the issue of a ceiling on the amount of subsidy and input that the Government can provide.
	The intention of our amendments is to establish with the Government the possibility of a cross-subsidy or circular subsidy that would indirectly rescue BNFL as well as rescuing British Energy. In our view, the contracts that were entered into were foolish—unnecessary work was commissioned, and excessive and pointless amounts of nuclear work have been created. To leave a loophole in the legislation—the failings of the reprocessing concept and BNFL's financial weakness, which could be covered up by additional subsidies pumped through in distorted contracts and prices—would make a bad commercial and environmental situation even worse. That is why we tabled amendments Nos. 14 and 15, and I shall certainly support the amendment tabled by the hon. Member for Bury, North.

Brian Wilson: I urge the Committee to resist the amendments. I was interested in the comment by my hon. Friend the Member for Bury, North (Mr. Chaytor) that there is ambiguity about the pros and antis in this debate. Some people are anti-nuclear, but pro the legislation, and vice versa. I recall that there was an ostensible ambiguity at the time of nuclear privatisation. As someone who opposed nuclear privatisation, I remember very well that it was supported by Greenpeace and kindred spirits, as they thought that privatisation would damage nuclear so much that its demise would be hastened. One reason why I am cynical about Greenpeace is that it keeps starting court cases for which it gets cheap publicity before abandoning them in less publicised ignominy. As someone who, for all the right reasons, did not think that British Energy should ever have been privatised, I believe that Greenpeace, for all the wrong reasons, supported something that was greatly against the public interest.
	The hon. Member for Hazel Grove (Mr. Stunell) has just painted a rather bizarre scenario, and if I was as big a conspiracy theorist as him, I might imagine that the Tories were in league with Greenpeace and all sorts of dark forces, and that the whole business of privatising British Energy was a long-term conspiracy. However, I relieve the Tories and the predecessors of the hon. Member for Reigate (Mr. Blunt) of that charge—I just think that they were stupid, short-sighted, dogmatic and, above all, greedy in privatising the nuclear industry.

Crispin Blunt: rose—

Brian Wilson: Which of those four qualities does the hon. Gentleman wish to comment on?

Crispin Blunt: I thought that I would contest the charge of greed. The Minister said that the company was sold by the taxpayer and has now gone into the private sector. The shareholders and bondholders who lent the company money now appear to have lost all their money. Far from being greedy, my predecessors successfully protected the taxpayer's interest.

Brian Wilson: I do not want to go too deeply into the matter, but what that analysis omits is the causal relationship between the problems of British Energy and the privatisation, which some people foresaw at the time from different perspectives, and the impossibility of unleashing into a privatised and liberalised market a nuclear company which, for all the right reasons, has irreducible minimum costs.
	We have taken up the debate where we left off. Opposition Members, as is their right and duty, are sniffing around in search of a better way, but none of them can argue convincingly for a better way than the one that we propose. Because restructuring and administration are postulated as opposites, Opposition Members have to support administration in order to oppose restructuring. That takes them down a rather curious route. In the case of the Tories, they have to believe that it is better for the company to end up in public ownership than for it to be given a chance to survive in the private sector, but that is for them to sort out.

Jonathan Djanogly: Surely the Minister accepts that restructuring is possible and, indeed, normal within administration.

Brian Wilson: As I said when I wound up the Second Reading debate, we came to the last chapter in Tory alternative scenarios, in which I thought we would be told who was likely to take the company out of administration, other than Government, to which there came no answer. What the hon. Gentleman says may be right in other cases, but there is not much sign of it being an option in the present case.
	The debate seems to have proceeded on a misapprehension—that somehow, if we went down the administration route, that would be cost-free, and that administration could proceed without the benefit of the Bill. Let me be clear. We have never been dogmatic about restructuring versus administration. At every stage of the process, we have said that everybody must sign up to restructuring, otherwise administration is an option. The Bill provides the legislative basis necessary to accommodate either eventuality.
	We are not saying that one course is absolutely right and the other absolutely wrong. We are saying that, on balance, we think that it is better for the taxpayer, better for security of supply, and better for nuclear safety if restructuring is the chosen option. If everyone signs up to that, restructuring will take place. However, if everybody does not sign up, administration is the alternative way. As a responsible Government, we have to take powers in that direction as well.

Michael Weir: I am interested in what the Minister is saying. My understanding is that following the privatisation of nuclear energy, if the company was unable to continue, irrespective of whether the Bill was in place, the assets, such as they are, and the liabilities would come back to the Government in any event. The Public Accounts Committee made that point in a report in 1999. Therefore, would not the taxpayer pick up the tab in the event of administration, whether or not the Bill is enacted?

Brian Wilson: No. The assets of the industry are now in the hands of a private company. If restructuring is successful, they will continue to be in the hands of the private company, and if it is not successful, they will go into the hands of an administrator, who will still have to run the business. The stations will continue to run, as was properly made clear by the hon. Member for Twickenham (Dr. Cable), and that will happen precisely because Government have taken the appropriate steps to make sure that funding is available in the form of a temporary loan facility and ultimately—this is the important point—if necessary in the form of funding to an administrator.
	The stations will not continue to run if no one is providing the financial support to allow them to run. That would lead to massive problems, which no responsible Government could contemplate. Whichever route we go down, there will be costs associated with it. Clause 1(a) is framed to provide maximum flexibility, so it could be used for the rescue aid loan facility that we are providing—I emphasise again that it is a loan facility, so we should not play off the definition of a loan against suggestions that this is a cost in terms of grant or support to other industries. It could be used to support BE companies if they go into administration, funded through the administrator, and it could be used to fund trading arrangements, but not nuclear liabilities of BE's operating companies in public ownership if they were acquired under clause 1(b)(i).
	We are taking the maximum range of powers for the full range of eventualities. However, we will not use the authority to fund under clause 1(1)(a) to fund the solvent restructuring. That will be done under the schedule 12 provision, which is specially designed for liabilities. Nor will clause 1(a) be used for subsidising the private sector BE in any way, apart from liabilities that perhaps begin to meet the Hazel Grove conspiracy theory. I stress that, as has been said, clause 1 can be used only to fund to the extent permissible under EU state aid rules.

Stephen Ladyman: I fully support my hon. Friend's approach in trying to give solvent restructuring a chance. The nightmare scenario presented by the hon. Member for Twickenham (Dr. Cable) raised the question of what would happen if that restructuring goes ahead but circumstances change. Is it not correct that, in those circumstances, under company law, the fiduciary duties of directors of the company would be the same, in effect, as the fiduciary duties on the administrator—in other words, to minimise the losses and liquidate any assets of the company? What the hon. Member for Twickenham depicts as a nightmare scenario is no such thing, and my hon. Friend's approach is the only sensible one to try.

Brian Wilson: I welcome my hon. Friend's comments. He is right. The hope and the expectation of Labour Members—or most Labour Members—is that the restructured British Energy would be a successful company, and that the measures that we are taking in the context of the restructuring would facilitate that outcome.
	There has been some confusion, which the spokesman for the Opposition, the hon. Member for Reigate (Mr. Blunt), was helpful in clarifying, about BE's costs. The hon. Member for Twickenham suggested that costs would have to be reduced by 10 per cent. That is the reduction that would be necessary before restructuring, but of course the restructuring plan cuts costs by removing historic liabilities. Together with the projected improvements in output, that would deliver a sufficient cut in costs to ensure profitability. No further improvements would be needed, beyond the restructuring plan. Clearly, the willingness of people to sign up to a restructuring plan is based on that expectation and belief.
	I do not accept that the costs of administration are lower than those of restructuring. Administration involves the cost of paying the administrator and impacts on BE's operation. We support restructuring not for any dogmatic reasons, but because it is a pragmatic way of ensuring the continued safe operation on fair terms for the taxpayer. Government support is not open-ended and is limited to nuclear liabilities.

Crispin Blunt: The really clever thing about what the Minister is doing is that not only are consultants and lawyers running up vast fees preparing the plan to rescue British Energy, but it is almost certain that the administrator will run up equally vast fees as well, so the taxpayer will get a double benefit from the Government's strategy.

Brian Wilson: If that is a policy statement saying that the Tories are against consultants and lawyers running up fat fees, I welcome it as the biggest U-turn in political history. Of course, the best way of avoiding the administrator running up fat fees is not to have an administrator. That is one of the reasons why restructuring of the company is our preferred option.

David Chaytor: On the limitation of funding to liabilities, is not my hon. Friend therefore agreeing with amendment No. 26, which I tabled? The amendment seeks to ensure that the funding will not be used for future reprocessing. Will he deal with the point that I made earlier regarding negotiations between BNFL and British Energy about the future costs of reprocessing?

Brian Wilson: I do not disagree with the spirit of that intervention, but I should like to deal with the issue in my own way. I do not want to speak for too long, as I am aware that there are other groups of amendments and I do not want to close down debate on them.
	Clause 1(1)(a) provides statutory authority for expenditure on British Energy in the situations that I have described. It puts the loan facility that the Government have provided to BE on a firm statutory footing. The facility is currently being provided under the authority of the Appropriation Act 2002, which is entirely proper, given the circumstances. However, the principles of a long-standing agreement between Parliament and the Government spell out that, although that Act can be relied on in the short term, it is a matter of good practice that significant expenditure should have the explicit statutory authority of Parliament. Clause 1(1)(a) gives that authority in relation to the loan facility.
	The statutory authority provided by clause 1(1)(a) could be used by the Government to provide essential funding to keep the nuclear business running safely in the event of an administration. That could include funding the administrator. It would also allow the Government to continue to fund the trading arrangements of the operating companies if they came into public ownership.

Paddy Tipping: The Minister has rightly set out the provisions to allow the aid to be made available. What he has not said is how much remains in his energy budget. Although the £650 million is a loan, does it preclude the provision of extra financial aid to other energy sectors?

Brian Wilson: I do not think that my hon. Friend can throw away the key point merely by including the word "although" in his comments. A loan is a loan, so it is expected to be repaid. The safeguards that the Government have established in that regard are well known. None the less, I would prefer to answer his question on a positive note. As he knows, we had a very constructive meeting today on the subject of coal, which is close to his heart and mine. I do not think that this is a time at which we should try to play off one sector against another. We have obligations and responsibilities in respect of British Energy, security of supply and the safe operation of nuclear power stations. It is up to us as a Government to ensure that those issues are compatible with our other responsibilities. Of course, that will be reflected in the energy White Paper. We are making progress on all those issues, so I say to him that now is not the time to drive in wedges, although I know that that is not his intention.
	Amendment No. 12 seeks completely to remove clause 1(1)(a), which exists for reasons that I have explained. Given the points that I have made about the importance of the provision, I hope that hon. Members will not press that amendment.
	Amendment No. 10 proposes that clause 1(1)(a) should ensure that financial assistance can be provided to the company only in relation to "qualifying activities", which amendment No. 11 defines as
	"financial liabilities generated by a British Energy company prior to 4 September 2002, to a maximum of £2,100 million."
	There again appears to be some confusion, as the Government have said that they are prepared to provide assistance for BE's nuclear liabilities. We intend to do that using the power provided in schedule 12 to the Electricity Act 1989, having removed the ceiling using the Bill, rather than under the clause. Therefore, I would say that the provision is separate from funding BE's financial liabilities. In any case, subsection (1)(a) is not specifically aimed at funding financial liabilities. The Government have already made it clear that we do not intend to bail out BE's creditors. Rather, it is our intention that funding should be used for day-to-day operational costs such as salaries or trading arrangements. I therefore suggest that amendments Nos. 10 and 11 are not appropriate to the purpose of the clause.
	New clause 1, which was tabled by Opposition Front Benchers, suggests that any expenditure
	"under the provisions of this Act shall be restricted to the historic liabilities of British Energy plc as at 4th September".
	Again, I strongly disagree with that proposal. As I have continued to emphasise, the provisions in the Bill ensure that the Government are fully prepared for every eventuality. Restricting expenditure to historic liabilities would leave the Government unready to deal effectively with a range of scenarios, including the possibility of having to fund BE through administration or, alternatively, continuing to fund the trading arrangements of the operating companies if they were to come into public ownership.
	Amendments Nos. 3 and 4 essentially seek to limit the way in which financial assistance can be delivered to BE. Grants, loans and guarantees are clearly the main ways in which we expect to deliver assistance. However, as I said, the Bill needs to prepare us for all eventualities, so we want to ensure that the provision preserves flexibility to enable us to act appropriately in the circumstances. That is in the interests of taxpayers.
	Amendments Nos. 14 and 15 seek to ensure that the Government can commit no expenditure
	"on the management, transportation, storage or reprocessing of nuclear waste"
	under the clause. The hon. Member for Hazel Grove raised that issue in a somewhat conspiratorial context, suggesting that the provision would act as a conduit to BNFL. Given the checks, balances and safeguards, I do not think that that scenario should be taken seriously. Of course, that is not the intention of the Government.
	My hon. Friend the Member for Bury, North (Mr. Chaytor) said that support should not fund reprocessing of fuel. Again, I do not approach the matter from any ideological point of view. Storage might have been cheaper if plants had been built on that basis, but with the exception of Sizewell B, storage facilities are very limited. This is an issue not of principle, but of practicality, and contracts on operational arrangements envisage that some fuel will be stored. I emphasise that I am not getting into discussing the relative merits. From personal experience, I know that British Energy has at some points during its history favoured on-site dry storage. It all depended on the deal that we could get out of BNFL. Storage versus reprocessing remains an operational matter and I am sure that BE and BNFL will communicate any future changes to plans. However, my hon. Friend made his points well.
	Amendments Nos. 25 and 26 would provide that support for BE could not be used
	"for the purposes of reprocessing spent nuclear fuel".
	I have dealt with that.
	Let us consider the longer term. We have already said that we shall review the way in which nuclear liabilities are managed when the liabilities management authority is established. Again, that might help my hon. Friend the Member for Bury, North, and I hope that he will not press his amendments.
	I hope that I have explained sufficiently the problems that are attached to the amendments in the group. If the hon. Member for Twickenham withdraws the amendment, we shall have even more time to discuss the next group.

Vincent Cable: The Minister began by having a go at Greenpeace. I remember when Greenpeace abseilers demonstrated outside my window on the 21st floor of the Shell centre and I therefore understand how he feels. However, Greenpeace has done an admirable job of conducting research that is not available outside government on the subject of our debate. It is the only organisation to produce detailed and professional assessments of the costs and benefits of both administration and nuclear power production. Given the obscurity of much official data, it has performed a heroic task. My assessment of its role is therefore positive.

Brian Wilson: I could have a go at Greenpeace under other circumstances, but I simply recalled their historical role. I wonder whether the hon. Gentleman's admiration extends to that body's original support for privatisation of the nuclear industry as a method of destroying it. It has perhaps turned out to be a method of costing the taxpayer a lot of money.

Vincent Cable: As we have said, privatisation is a disaster, but Greenpeace had a good reason for promoting it. Although privatisation's defects are manifest in the nuclear industry, it has at least led to an element of transparency about the costings and economics of nuclear power. That may be lost as the industry returns to some form of public ownership.
	The hon. Member for Sherwood (Paddy Tipping) made a brief, common-sense and cogent point. He asked whether the funding was at the expense of other parts of the Department of Trade and Industry energy budget. He did not receive an answer. The letter that the Minister sent all hon. Members about the debate underlines that the £650 million is not a repayable loan on a fixed schedule but a facility. If things go wrong, the sum will remain a major energy commitment, clearly at the expense of the coal and renewables industries, which might otherwise have benefited from modest pump priming. That is important.
	The hon. Member for Reigate (Mr. Blunt) made some helpful, business-like contributions. I shall not repeat them all. He asked whether the Bill would be necessary if we were considering only administration. We did not receive an answer to that. He also emphasised that a problem with the solvent restructuring route is its impact on the competitors in the industry. It is not simply a question of the competitors feeling aggrieved; the Government have created a competitive electricity market, which has been effectively wrecked. None of the participants is confident that there is a level playing field. Their experience will prejudice their long-term investment decisions. The impact on competitiveness and competitors is one of the main arguments against the route that the Government have taken.
	We missed the presence of hon. Member for Bury, North (Mr. Chaytor) on Second Reading because he knows much about the industry. He and my hon. Friend the Member for Hazel Grove (Mr. Stunell) helpfully reminded us of the link between the restructuring operation and the reprocessing industry. A link exists; we do not need to propose conspiracy theories. The contracts are being renegotiated and we need to take account of the reprocessing industry. It was right to remind us of the ramifications of that.
	The hon. Member for Orpington (Mr. Horam) helpfully put our deliberations in the context of the wider budget. The Bill has enormous implications for public finance. We are considering billions of pounds of additional costs when the Government are straining at the limits of financial credibility on both tax and expenditure.
	The hon. Member for Angus (Mr. Weir) asked whether one of the motives for the Government's choice of the solvent restructuring route was maintaining a vestige of credibility for private nuclear power, thus sustaining the hope that the energy White Paper would cover it. That is a plausible motive, although it remains for us to have the debate. However, the hon. Gentleman made a helpful point.
	There was not an enormous difference between our approach and the Minister's to solvent restructuring versus administration. He acknowledges that the decision is pragmatic and that the difference between the routes is not enormous, although he could not resist a dig about administration being less acceptable for safety and security of supply. I do not believe that that reflects the Secretary of State's view. However, the Minister acknowledged that we are considering a pragmatic decision that entails costs and benefits on both sides.

Brian Wilson: I do not want to prolong this debate further, but I must set the record straight. There was never any question but that both routes would be subject to exactly the same regulatory control by the nuclear installations inspectorate and so on. There is not a safety issue, otherwise we would not have postulated them as two viable alternatives, which we have done from day one.

Vincent Cable: That is why I was surprised that the Minister even mentioned the matter, because it is clearly not an issue. He is quite right, however; we are concerned—at least in terms of the first group of amendments, which relate to what is essentially a pragmatic issue. The damage that would be done through the impact on competition and on the other competitors in the industry leads us to prefer the administration route. However, our main reason for pursuing these amendments—and the reason that I shall certainly pursue them to a vote—is that the way in which the Government have gone about this leaves open very large and completely open-ended financial liabilities, and we have had no satisfactory explanation of how they will be capped.

Question put, That the amendment be made:—
	The Committee divided: Ayes 168, Noes 302.

Question accordingly negatived.

Crispin Blunt: I beg to move amendment No. 1, in page 1, line 7, leave out paragraphs (b) and (c).

Sylvia Heal: With this it will be convenient to discuss the following amendments: No. 2, page 1, leave out lines 18 and 19.
	No. 5, in page 2, leave out lines 1 to 3.
	No. 9, in title, line 1, leave out
	', or the acquisition of any securities of or any part of the undertaking or assets of'.

Crispin Blunt: We now turn to the issue of public ownership. The purpose of the amendment is to try to prevent the Government from going down a disastrous path—taking the company back into public ownership. The Minister said earlier that no one had come up with a better way. In fact, a better way would be that suggested by my hon. Friend the Member for Huntingdon (Mr. Djanogly)—a framework for the future of nuclear energy. There is no White Paper or other kind of framework on which people can form a judgment about the future of the industry. Indeed, as far as I am aware, there has been no unequivocal statement about the merits of nuclear energy from the Labour party for 25 years.
	It is against that background that the industry is faced with such appalling uncertainty. Absolutely the worst outcome would be for the company to end up back in public ownership. Let me explain why that is plainly the case. The option of public ownership is simply not required. There is no threat to the security of supply from the power stations and no practical safety issue. If the company goes into administration, there will be an asset to be sold out of administration, because the stations and their workers generate not only power but cash, even at today's electricity prices. The Government have already said that they will take title to the liabilities under the rescue package that they are putting together with British Energy to keep it as a rescued entity in the private sector. That is a poor option, but public ownership would be a catastrophic option.
	Do the Government really think that if the company goes into public ownership they will run it any better? That goes against all the evidence about public or private sector ownership over the past two decades. Aside from British Energy's commercial strategy, its operating performance—the performance of the work force, from plant manager downwards and of the plants themselves—has been very good. Indeed, some people would say that because British Energy has been so efficient at producing more power out of resources and reducing its cost base, it has contributed to the electricity industry's wider problem by producing more electricity into the market at lower cost, which is partly why the electricity industry now faces the problem of too much supply and not enough demand. Those people would argue that British Energy would have been better off investing its resources differently instead of driving its costs down. However, its work force have done everything that has been asked of them to improve their plants' output and operational performance. It cannot possibly be the case that that would be better in the public sector.
	Let us deal with the consequences of public ownership. First, there would be a complete lack of transparency over costs. It is difficult enough to identify the costs to the Government associated with British Energy's proposed rescue package, so goodness knows what they would be in the case of public ownership, given the company's relationships with BNFL and its tax situation. What would happen in relation to the disposal of fuel from a publicly owned company? The situation would be even more opaque that it is now. Would the company continue to improve its operational performance? No, because it would have no incentive to do so. Its operational performance would almost certainly decline from what has been achieved by British Energy's management and work force in private ownership.
	Most devastating of all is the effect that public ownership would have on the future of the nuclear energy industry. That is why I profoundly disagree with the Minister's assessment of why he was opposed to privatisation in 1989. The simple fact is that if there is to be a new generation of nuclear power stations, it is conceivable that that investment would come only from the private sector. However, the private sector would make that investment only if there were a framework that allowed investors to judge performance. The Government have failed to produce that framework.
	We do not know what the future price of electricity will be. Investors will make their own judgments about that, and for significant parts of the past year City analysts said that British Energy shares were worth buying and that the company would be successful commercially. Those judgments proved erroneous, but assumptions made last summer about the long-term price of electricity could turn out to be true by next summer if generating capacity continues to be withdrawn. The question of the future of coal-fired power stations after 2008, and the costs of the European directive on clean coal technology and other matters, will also have an effect on the generating sector.
	If the industry is put into public ownership, will the Government say that they will build new nuclear power stations? No—I do not for a minute believe that they will. However, designs for a new generation of nuclear power stations might be available in five or 10 years. Those stations would produce electricity and help us to meet our Kyoto obligations in the most economically efficient way. It would be wholly irresponsible if that option were shut off.
	In that respect, I depart from Liberal Democrat Members. They want the option to be shut off, and consider that the proper course of action is to run existing power stations to the end of their lives and not replace them. However, choices have to be made about bringing on new generating capacity in the UK. If British Energy were taken into public ownership, we would be deciding not to enable private companies to build new nuclear power stations that could use new designs, such as pebble-bed reactors. That would damage our national interest, as such stations might be the best economic and environmental answer for the UK. That is why it is essential that the company does not end up in public ownership.

David Drew: I am pleased that the hon. Gentleman has gone on to the matter of engineering new generating capacity. Will he tell me who owns Westinghouse?

Crispin Blunt: I can tell the hon. Gentleman that BNFL owns Westinghouse. That is why the Conservative party will welcome the proposals that the Government will make on the liabilities management authority and the reorganisation of BNFL. If the Government pursue a sensible strategy on those arrangements, Westinghouse will be sold into the private sector, where it belongs. However, it appears that the Govt will produce another hybrid and that another hideous public-private partnership will emerge. Westinghouse designs and builds new nuclear reactors, and the company would be well placed to compete in the private sector with other similar companies from around the world.
	If the Government take nuclear generation entirely into the public sector, the message would be that the industry was a lame duck that could survive only with public subsidy. In the end, there would be no opportunity to consider new options for nuclear generating capacity, even if they were in the UK's interests. Those options are at present an open question, and it would be wrong to preclude them now.
	What message would be sent to the rest of the electricity market if the company were taken into public ownership? The case about the Magnox reactors owned by BNFL has often been made by my hon. Friend the Member for Croydon, South (Richard Ottaway). He is not here at present, but he has pointed out that they are the oldest power stations supplying electricity to the grid, that they are uneconomic on their own, and that they are kept going by subsidies from BNFL—that is, the Government.
	I cannot come to a judgment about that, as I do not know enough about the economics involved, or about that particular case. However, if all nuclear reactors were in the public sector, it could be claimed that they were being kept in production unfairly, at the expense of the rest of the market.
	The point was eloquently made by the hon. Member for Twickenham (Dr. Cable), and also by Ofgem in its submission to the Government, that if the Government interfere with the operation of the electricity market, they will raise the internal rate of return for people who want to invest in that industry. If the Government take the company into public ownership, there will be a significant increase in the risk for investors. To offset that risk, they will demand a higher return on their investments in new UK generating capacity.
	That is why I urge the Government to make it clear that they do not intend to interfere in the market. It is vital that they stand back and allow the market to work in order to secure the largest possible private investment so that our future generating capacity needs are met.

John Bercow: Does my hon. Friend agree that he is justified in seeking the Government's assurance that they do not propose to nationalise, on account both of their treatment of British Energy and of the fact that we are shortly to have the Second Reading of the Industrial Development (Financial Assistance) Bill, which is a further token and indication of the Government's thinking on these subjects?

Crispin Blunt: I am grateful to my hon. Friend; he makes the point extremely well.
	I entirely part company with the hon. Member for Twickenham in his view of the current state of liberalisation and privatisation in the electricity market, although I am not sure that he meant his remarks to be as extreme as they sounded when he said that the disadvantages of privatisation were manifest. How are those disadvantages manifest? In the 40 per cent. reduction in wholesale electricity prices that has sustained our manufacturing competitiveness? In the 35 per cent. reduction in prices for consumers since privatisation? Those price reductions alone have lifted 1 million people out of fuel poverty.
	The privatisation of the industry has been of enormous benefit to the United Kingdom. We are still only at the initial stages of understanding how best to use Ofgem to ensure that the industry remains as competitive as possible, yet there is so much evidence that the lessons have been well learned in the UK and that the rest of the world is following our example—not least the European Union, where there is to be privatisation and liberalisation.

John Redwood: My hon. Friend makes a powerful case against nationalisation. Is there not another important point? Whenever nationalisation has taken place in the past, it has been at enormous financial risk to the taxpayer. It costs far too much money when it goes wrong and puts money that is needed for teachers, nurses and doctors to a wholly unproductive use, as I am sure that my hon. Friend will confirm.

Crispin Blunt: I entirely agree with my right hon. Friend. That is true not only of companies that are taken into public ownership, but of the Government's support for British Energy's proposed restructuring package. The value left for the bondholders or shareholders of British Energy if the deal is approved would otherwise have been available to the taxpayer to spend on the services to which my right hon. Friend alluded. Furthermore, staggering amounts of money are being spent on consultancy fees; I understand that, to date, the bills from lawyers and management consultants amount to £9 million and that a possible total of £100 million was suggested in The Times. The Minister pooh-poohed that on the radio. He asked where such figures came from, but if the Government have already been presented with bills for £9 million, I should not be surprised if the total were £50 million or even £100 million by the end of the process. It would be a tragedy to throw away the benefits of the industry being in the private sector, when potentially huge damage could be done to the UK's future interests. Privatisation and liberalisation are the right economic answers. Sometimes when companies get into commercial difficulties, investors lose money and the companies go bust or into administration. In this case, there will be assets to be sold out of administration, which will work in the public interest in the UK by generating power and cash for people who choose to buy those assets—which is why British Energy should not be allowed to fall into the hands of the Government.

David Drew: I agree with the hon. Member for Reigate (Mr. Blunt) about the need to keep open opportunities for nuclear generation, but on everything else he talks absolute nonsense. The Government would be foolhardy not to provide for the option of returning British Energy to public ownership if that were the only way to safeguard its basic integrity and, more important, the skills and expertise that are vital in meeting national and international requirements. The nuclear industry's special circumstances require that those skills and that expertise are kept alive.

Mark Hendrick: I am not suggesting for a moment that the company will be nationalised, but has it not been the case throughout history that nationalisations have resulted from market failure? Not to nationalise in some circumstances would be totally irresponsible.

David Drew: I agree. If the state were not the lender of last resort, who would be? It is a nice idea that one can asset strip and reconfigure the industry, but everyone—whether pro-nuclear, anti-nuclear or agnostic on nuclear—would worry if the industry were split up under the pretence that everything will be hunky-dory. That would be an illusion at best and could be incredibly dangerous, given the times in which we live, so the Government must act honourably and sensibly. I do not believe that the market would have any interest in taking on responsibility. It would look at the financial outcome—certainly not at safety and security.

Crispin Blunt: New nuclear energy needs a framework within which people can invest. It will plainly include some form of payment to a fund to provide for the risks currently being taken by the Government. I refer not to the current decommissioning fund for which British Energy currently provides. The issue that must be addressed is where a company that is meant to contribute from its profits to its back-end fuel liabilities does not make a profit.

David Drew: I wish that I could be as optimistic. The City works within an incredibly short-term framework but the nuclear industry, with the best of intentions, looks to a set of long-term outcomes—well beyond the life expectancy of most right hon. and hon. Members. Bringing those completely contradictory themes together is neither easy nor practicable, so the Government are entirely right.
	It is a nice notion also that keeping British Energy in the private sector would in some way make all the calculations, different arrangements and contracts that much more transparent. Anyone who has seen the parliamentary questions that are regularly asked about BNFL or British Energy, which is more difficult, will know that the stock answer is that financial matters are confidential to those companies. That is the way of the world; huge contracts dependent on the negotiations between the different interested parties are involved, and they are not in the public domain.
	The fact is that the way in which the industry was privatised is at the root of many of the problems. The lines drawn between British Energy and BNFL have always been grey. Many of my constituents go up and down the road between Berkeley and Barnwood, as they are employees of those companies. Anyone who knows about the industry will say that it is very complex and that the overlap is always so great that it is very difficult to pretend that there is transparency in the financial operations. More importantly, the companies are so integral to each other that it is very difficult to pretend that there is anything other than a seamless arrangement between them, rather than a join. So the idea that there is transparency is somewhat illusory.
	The third point is the suggestion that we would be fundamentally different from other parts of the world. I wish someone would tell me where the nuclear industry operates entirely through the marketplace and where it is entirely about private enterprise. In every part of the world—whether in South Africa, the former Soviet Union states, Japan or even the United States, which is the closest comparison—the state is involved directly or indirectly in determining the strategy, providing the finance and setting the parameters.
	Again, the idea that we have a nice, neat division between the private and public sectors is completely illusory, so the Government are entirely right to have a backstop and to be responsible. They must have the means to keep people in the industry so that it can do what it needs to do nationally and, more importantly, internationally.

Mark Hendrick: Will my hon. Friend give way?

David Drew: I hope that my hon. Friend will not mind if I conclude my remarks now.
	Even with the best will in the world, I cannot support the amendment, and I hope that it will not be pressed to a vote. If it were accepted, there would be an even greater threat not just to market sensibilities, but to the whole strategic direction of the energy industry in this country and, I dare say, further afield.

Jonathan Djanogly: First, I should like to declare a non-registerable interest in British Energy shares.
	My first point is technical and relates to the definition of British Energy in the context of the amendments. The Bill defines "British Energy company" as
	"British Energy p.l.c. or a company which either is or immediately before the passing of this Act was a subsidiary of British Energy p.l.c. (within the meaning of the Companies Act 1985)".
	The Companies Act 1985 uses a control definition of "subsidiary"—normally, if more than 50 per cent. of the company is owned—but a smaller percentage holding could apply if control of the subsidiary were owned through voting rights.
	I should like to ask the Minister some questions. Are there any subsidiaries that are not 100 per cent. owned? If so, who owns those minority shareholdings? If there are such companies—for example, joint ventures and so on—will the Government give an assurance that clause 1 will not be used to acquire them? Of course, the fear is that those provisions could be used effectively to pay off third parties and to get around the order of payment that would apply under the normal insolvency rules. If the clause were used to subvert our insolvency rules, there could be great cause for concern and hon. Members would certainly want it to be debated.
	Nationalising the company would be a disaster. Clearly, it has had problems. There have been management and strategy failures, and the Government have failed to understand the implications of their own legislation on the market. Ironically, the windfall tax has taken from this sector about the same amount as the taxpayer will need to pay towards British Energy's historic nuclear fuel liabilities.
	We then have to consider the climate change levy and the new electricity trading arrangements. We could discuss the Government's failure to give a clear lead on where the industry is going. Without the energy White Paper, we and the whole energy sector are forced to scramble around in the dark. That will continue until we know what is in that White Paper.
	Of one thing I am sure: any attempt to manage this business from Whitehall would certainly not work. That would remove the sector even further from the disciplines of the marketplace, and would load further liabilities on to the taxpayer. The power of acquisition in this clause will send all the wrong messages. This company should go into administration, as any other company in a similar situation would do. The Government have admitted that, either way, they will be responsible for nuclear liabilities. Why, therefore, do they keep digging a hole—a hole that will appear in taxpayers' pockets? That hole will get bigger if the Government start buying up power stations.
	The Government view having an administrator as a possibility but, worryingly, the Minister for Energy and Construction is already undermining the role of any such administrator. That role, of course, is to maximise returns for creditors. On Second Reading, the Minister said that the Government were
	"not aware of any credible private sector interest in acquiring BE if it were to end up in administration."
	He has repeated that view in a slightly different way this afternoon. In fact, he has gone even further, asking why the Opposition had not come up with a purchaser for the business. I felt that he had rather missed the point. If what the Minister said is coupled with the failure to publish the White Paper and to show potential buyers what will happen in the sector and what kind of marketplace will exist, what rational person would want to be a buyer? Could it be that the Government are, in effect, killing the market so that they can buy the assets back on the cheap if restructuring fails?
	Again on Second Reading, the Minister noted:
	"Any acquisition would of course be a commercial arrangement with the administrator of the same kind that a private buyer might make; the Bill gives the Government no special powers in that regard."—[Official Report, 27 January 2003; Vol. 398, c. 588.]
	On the face of it, that is absolutely right. I cannot take issue with it. However, in practice, the argument is nonsensical. The Government can manipulate the market, and may have done so already. That being the case, if the Government were to put the provisions that we are discussing into effect, how could they reach a fair valuation if they were to buy British Energy or parts of it? It would be impossible, and it would give clear cause for shareholder or creditor class action.
	From reading many of the speeches on Second Reading, I saw clearly that there had been a general misconception of what administration involves. Most hon. Members seemed to believe that administration could lead to the sale of British Energy, either to a third party or to the Government. The possibility of such a sale is contained in clause 1(1)(b). However, in practice it is rare that administrators will sell assets in the form of shares, because purchasers coming to an administrator want to cherry-pick. They want to choose the assets that they want to buy. In most cases, they will not accept taking all the assets. Even if they do, they will not want to take all the liabilities. As far as possible, they will leave the liabilities with the company in administration. Clearly, that means that buyers may wish to acquire individual power stations rather than the whole lot. Of course, they will do that only if they are not scared off by the Bill, the lack of a White Paper and the threat of nationalisation. They are undermining the whole process.
	When the Trade and Industry Committee conducted an inquiry into the security of energy supply, one feature that shone through when we considered the gas market was that the key to its success—it is generally considered to have been successful in recent years—has been its freedom and the adaptability that results from the freedoms that it has. Rather than providing for nationalisation and greater inefficiencies in the market, why cannot we now draw a line on intervention and accept that the market will eventually have its own way and that intervention will fail?

Vincent Cable: I want to say just a few words in this debate, which is essentially about the implications of the possibility of public ownership and the effect that that could have on the industry.
	I do not want to dwell on the history of privatisation, but the truth is that it is a very mixed story. The privatised company got its assets at an almost ridiculously cheap price, having written down not just the decommissioning liabilities but almost all the capital as well. Private ownership contained a positive story in respect of plant management, and the hon. Member for Reigate (Mr. Blunt) was right to draw attention to that. However, it was coupled with enormous strategic errors in plant acquisition, failures to diversify and unseemly short-sighted greed. Even at this very late stage, the departing chief executive is scrambling over the terms of his terminal contract in a way that belittles the whole episode.
	I do not have dogmatic views about public ownership in general. In some cases, it is probably the most effective and appropriate form of organisation. That would be true in the case of a national network monopoly, and the railway system is the most obvious example of that. However, the energy industry is not that type of industry. It is competitive and there is no particular reason for the Government to own nuclear power plants any more than they should own gas-generating plants, chemical plants or steel factories. There is no reason for that whatever.
	Although I do not agree with everything that the hon. Member for Reigate said, he was absolutely right to stress the fact that private ownership has at least the merit of transparency. Companies have to report to the market. Under the listing rules, it is clear when a company is trading profitably and when it is not. He raised the valuable point about the Magnox reactors, which we have not mentioned enough in the debate. They are older and less efficient, but they are happily plodding along while British Energy has been forced to the brink of bankruptcy. That is very odd, and it relates to the way in which the public sector organisation is funded.
	The hon. Gentleman rightly said that the position of the Liberal Democrats is not the same as his, but perhaps a double negative is involved. I do not hold a doctrinal view about the future role of nuclear power. From what we know at present, the economics of nuclear power under its present technology is not attractive and does not make sense. That is why I have argued in the past for a tougher approach to the bail-out. I have also said that there may be an argument for premature closure. I do not, however, push that as a matter of dogma, but the hon. Member for Ochil (Mr. O'Neill) hinted at why that argument might apply. As plants approach the end of their lives, safety and other costs tend to rise.
	If a new set of technologies comes along that enables the private sector to produce nuclear power competitively and cleanly in the long term and to internalise all the decommissioning costs, good luck to the companies in that sector. I would certainly not try to ban them on doctrinal grounds. My concern is much more with the public sector. If the industry goes into the public sector, it is much more likely that the economics of new nuclear power will be fudged and that we will have a new generation of nuclear power stations for bad economic reasons. In that sense, I take the opposite view to the hon. Member for Reigate. None the less, the essence of his argument is valid, and I will support the amendment if it is put to a vote.

Michael Weir: This brief debate illustrates clearly the point made earlier by the hon. Member for Bury, North (Mr. Chaytor) about the cross-currents between pro-and anti-nuclear spokesmen. I very much agree with what the hon. Member for Stroud (Mr. Drew) said, but from the opposite angle. It seems to me that there is a logical inconsistency in the position adopted by the Opposition in calling for the company to go into administration and opposing the prospect of it then being taken into public ownership. Inevitably, if the company goes into administration, as I said previously, the liabilities, at least, of British Energy would fall to the Government. I reiterate that the Public Accounts Committee report on the state of British Energy in 1999 confirmed that the taxpayer is the guarantor of last resort, and that if the company falls, the Government must pick up the pieces. Again, the Library research paper states categorically that if British Energy goes into administration, all its nuclear liabilities would fall to the Government.
	The effect, therefore, of removing paragraphs (b) and (c) would be that if the restructuring failed and the company went into administration, the liabilities would fall to the Government, but they would not be in a position to pick up the assets and renationalise the company. That would be a shame because, from my point of view, as I said earlier, nuclear stations should be gradually run down and decommissioned at the end of their lifetime. The best way to do that is in public ownership rather than private ownership. I will therefore oppose the amendment.
	My one worry about paragraphs (b) and (c) is that it is not stated that the companies would be nationalised. Furthermore, the Government are given the option—the hon. Member for Huntingdon (Mr. Djanogly) had a point in this regard—to take over shares in the company, not from an administration, although it is correct that the administrator would try to sell off assets, but before the company goes into administration. The Government could buy shares in British Energy or one of its subsidiary companies and, in effect, provide more cash aid by the back door. Instead of doing so through clause 1(1)(a), they could take a stake in the company and leave it in the private sector, but invest Government funds in it. That would be undesirable.
	On balance, I would be in favour of the company coming back into public ownership to be wound down, and I will oppose the amendment.

Brian Wilson: I sense a degree of intellectual confusion, if that is not too strong a term, on the Opposition Front Bench. We do not want to renationalise British Energy. We want it to be successfully restructured within the private sector. We have spent most of the afternoon discussing amendments tabled by all the Opposition parties that are specifically opposed to our preference for restructuring in the private sector. Only if those amendments had prevailed, and we had gone down the chosen path of administration while ruling out restructuring within the private sector, would the dread spectre of renationalisation, which was raised by the Opposition spokesman—or public ownership in any form—arise. They are the authors of the scenario—their preferred scenario—of administration, which would be the prerequisite for what they now say that they oppose: the public sector becoming the owner of the company.

Crispin Blunt: That is not the case at all. Is the Minister saying that if the company goes into administration, there are no assets to be put back into the private sector by an administrator? We know that the plants generate both power and cash sitting on their own. Of course there are assets to sell to the private sector. That is what an administrator would do. We are then into a discussion about what liabilities the Government take on, liabilities implicit since the company was formed and put into the private sector, and now being made explicit since the company had to run to the Government for a loan.

Brian Wilson: The hon. Gentleman has not helped his case. There is no dispute about the fact that if the company is in administration, there is either a public sector direction or a private sector direction for it to go in. Indeed, I would say that if it were in administration, we would still prefer a private sector outcome. The Government as owner would be the last resort, at present the most likely resort, as I do not see queues of prospective buyers forming.
	The intellectual inconsistency of what the Opposition are proposing is that those options would not arise if our preferred option of restructuring within the private sector—while always keeping the administration route as an alternative—prevailed. There is no dubiety about this. Only if the administration route is followed does the possibility of public ownership even arise.

Crispin Blunt: When other companies go into administration the Government do not rush to the House to ask for authority to buy their shares and take them into public ownership. They let the administrator get on with it. Why cannot that happen in this instance?

Brian Wilson: Because nuclear is different. If the hon. Gentleman does not understand that at this juncture in our deliberations, I despair. Other companies, even other power companies, can go to the wall. Though it is sad when jobs are lost, one can turn the key and walk away if nobody buys them, and that is the end of the story. In nuclear power generation that is the one thing that cannot be done. There must be an owner.
	The real alternative implicit in the amendment is that if there were no private sector buyer and no Government buyer, the administrator would run the company to the year dot. Of course, that would depend on the views of the nuclear regulators. We cannot just let any old administrator run a nuclear power company. For all those reasons, we return to the argument that we need maximum flexibility to allow for all the options that may arise in the weeks and months ahead.
	The daftness of all this is that I agree with many of the premises that the hon. Member for Reigate put forward before drawing entirely the wrong conclusion. I agree, of course, that it would be foolish to close down the nuclear option. I agree entirely that if at some stage there is nuclear new build, it is the private sector that must invest in it. Therefore, there is no vested interest from my perspective in the renationalisation of the company.
	I also entirely agree with what the hon. Gentleman says about the performance and efforts of the work force in the nuclear power stations. I hope that we all agree that whatever the problems of British Energy, they are in no way attributable to those who work in the plants.
	For all the reasons I have given, the fact that 22 per cent. of our electricity comes from nuclear, and because we have the obligation to maintain the entirely safe operation of the stations, we need flexibility in order to respond to the full range of circumstances.
	I return to the point that I made in the previous debate and on Second Reading, that this is in no way an ideological Bill. It is a pragmatic Bill, responding to a set of circumstances that are not of our making and not of our desire. We deserve the Committee's support in giving ourselves the ability to respond to all eventualities.
	Would it increase political uncertainty and discourage private sector investment if we took this power to respond to the eventuality of the Government having to take over? I do not think that it would. We have said that we stand ready to step in and acquire British Energy as owner of last resort in the event that a private sector buyer does not come forward. The market—the private sector—understands full well that we are not pursuing a hidden agenda to renationalise British Energy. There is no such signal to interpret.
	I was asked whether administration and public ownership would spell the end of private sector investment, so making nuclear new build impossible. Taking British Energy into public ownership, even in the short term, would not preclude private sector involvement in the future. As my hon. Friend the Member for Stroud (Mr. Drew) explained, there are models abroad, specifically in north America, of nuclear stations that are owned by the public sector, which are managed and operated by the private sector. There is no sharp dividing line, as the Opposition implied, between public and private sectors.
	Amendment No. 1 and consequential amendments would remove the explicit authority that we require to respond to the full range of eventualities. That would send out the wrong signals. Paragraphs (b) and (c) represent prudent contingency planning by the Government. They are not part of an ideological drive to renationalise the company, but form part of a package of measures that will ensure that the Government are prepared for every eventuality.

Question put, That the amendment be made:—
	The Committee divided: Ayes 154, Noes 309.

Question accordingly negatived.
	Clause 1 ordered to stand part of the Bill.
	Clause 2 ordered to stand part of the Bill.

Clause 3
	 — 
	Amendment of Schedule 12 to The Electricity Act 1989

Andrew Stunell: I beg to move amendment No. 18, in page 2, line 26, leave out from 'schedule)' to end of line 28 and insert—
	'is amended, such that the upper limit on "qualifying expenditure", as defined in the schedule, is raised to a total of £3,500 million, subject to provisions that the Secretary of State shall make reports annually to both Houses of Parliament detailing the scale of—
	(a) any such "qualifying expenditure" which has been made; and
	(b) any such "qualifying expenditure" which is anticipated,'.
	The amendment relates to the ceiling on the amount that can be transferred from the Government's coffers to those of British Energy. It is perhaps worth pointing out that the existing limit that applies to Government aid in parallel circumstances is £1 billion and that that maximum can be varied by the House to £2.5 billion. The Bill proposes to change those limits so that there is no limit whatever.
	The amendment concedes that the Minister might need a higher ceiling than he is given in current legislation. We are saying that the appropriate new ceiling is £3.5 billion—a 350 per cent. increase on the existing limit. Even in terms of the extended limit that is currently permissible, that would be a 40 per cent. increase. In fairness to the official Opposition, I point out that new clause 2 contains similar provision that would multiply that figure by about three to a very substantial £10 billion.
	My question to the Committee is this: how could it possibly vote against the amendment or new clause 2? How could such figures be exceeded? After my previous contribution, the Minister said that it was one of my paranoid fantasies to suppose that money might be channelled via British Energy to British Nuclear Fuels Ltd. Perhaps that is so, but what fantasy exists in his mind to suggest that he could spend a larger sum solely on British Energy and solely in the circumstances that he has so far outlined to the House and the Committee? If the money is not for BNFL, will it go to Nirex for underground storage? Does he fear that there might be a massive hole in British Energy's accounts and that it is in a similar position to that of Enron? What can be the justification for a provision that lifts the ceiling on an already very substantial amount to an even greater figure? In fact, the Bill lifts it to an unlimited figure.
	The Minister might merely be ensuring that he has got all the elbow room that he possibly needs, but if £3.5 billion or £10 billion is not sufficient, what possible number can he have in mind? What sort of project can he have even in his most extreme fantasies on which he could spend so much money? If he wants more than the £3.5 billion that the amendment concedes that he might be given, surely he is obliged to say what on earth it is for.
	I should like to draw attention to another aspect of the amendment: the condition that
	"the Secretary of State shall make reports annually to both Houses of Parliament"
	detailing the scale of expenditure and his plans for the future. We had it in mind to draft amendments that referred specifically to the National Audit Office or that would have established a specific regulatory regime. However, we received advice that that would not be appropriate in this context and we have accepted it.
	Whatever level of spending the Minister is committed to—whether it is unlimited, as he wants, or whether it is £10 billion, as the Conservatives suggest in new clause 2, or £3.5 billion, as we suggest—there is an imperative for the Secretary of State to put in place strong regulatory and reporting procedures. I hope that the Committee will consider our amendment favourably. We shall put it to the vote if the Government do not accept it.

Crispin Blunt: It is a sad and shabby state of affairs when we have to dispense with consideration of clause 2 in order to discuss the House's primary responsibility of exercising its fiscal duty on behalf of the people whom we represent to place some limit on the Executive.
	I endorse the comments of the hon. Member for Hazel Grove (Mr. Stunell). Surely the Executive cannot come to Parliament and demand an unlimited amount of money for one company. They cannot expect Parliament to write them a blank cheque. That is wholly unreasonable. The amendment would grant them £3.5 billion to support BE. It is inconceivable that they should require such an amount. New clause 2 would establish a principle with a limit of £10 billion. It would also require the Government to return to Parliament if they had to spend more than £2.1 billion, which is the amount of the additional liability—for the back-end fuel—that the Government are taking on.
	I look forward to hearing the Minister's explanation of why the Government cannot accept the amendment.

Brian Wilson: I have not the slightest ambition to spend such large sums of money. The nub of the argument is again the flexibility to respond to all circumstances. We have always said—I challenge anyone to dissent—

Jonathan Djanogly: rose—

Brian Wilson: Does the hon. Gentleman know from what he is going to dissent?

Jonathan Djanogly: Yes.

Brian Wilson: He should hang on and I shall give him something from which to dissent. We have always said that we cannot walk away from the liabilities. I challenge anyone to contradict that. If, despite all that we are doing and all the eventualities that we are covering, BE failed, and assuming that no private company stepped in to take over a station and its liabilities, the Government would have to act to ensure that the liabilities were tackled cleanly and safely. If no one can dissent from that, they cannot put a figure on the Government's response in a worst-case scenario, which I do not envisage.

Crispin Blunt: In the circumstances that the Minister outlines, surely it would be proper for the Executive to come back to Parliament to seek more authority. The idea that the Government should have unlimited authority to spend unlimited money is outrageous.

Brian Wilson: The option of returning to Parliament is not precluded. It is inevitable that, in the case of a catastrophic collapse, the matter would return to Parliament in many forms.

Don Foster: A written answer.

Brian Wilson: We have never dealt with the issue through a written answer. There have been statements, debates, oral questions and a Bill. The Government's handling has been transparent. At every stage, we have told hon. Members exactly what we are doing and the reasons for our actions.

Jonathan Djanogly: The powers that the Bill grants the Government are much wider than our debate suggests. The measure could apply to other companies in the same sector as BE. For example, if BNFL were floated , could not the clause allow for its renationalisation?

Brian Wilson: For reasons that the hon. Gentleman doubtless understands, no public Bill can deal with a single company. The measure is generic, but we are considering BE's circumstances.

Crispin Blunt: On a point of order, Sir Michael. The Minister said that this is a generic Bill that does not refer only to one company. However, from the long title of the Bill, it is clear that it refers only to British Energy. I have attempted to table generic amendments but was advised that they were not in order. I would be grateful for clarification on whether the Bill is generic or applies solely to British Energy.

The Second Deputy Chairman: That is not a matter for the Chair: it is more a matter for debate.
	It being five o'clock, The Second Deputy Chairman, pursuant to Orders [29 October 2002 and 27 January 2003], put forthwith the Question already proposed from the Chair.

Question put, That the amendment be made:—
	The House divided: Ayes 158, Noes 295.

Question accordingly negatived.
	Clause 3 ordered to stand part of the Bill.

Clause 4
	 — 
	Undertakings to Make Grants Under Schedule 12 to be Disregarded for Tax Purposes

Amendment made: No.19, in page 3, line 16, after 'has', insert 'the'.—[Mr. Wilson.]
	Clause 4, as amended, ordered to stand part of the Bill.
	Clause 5 ordered to stand part of the Bill.
	Bill reported, with an amendment.
	Order for Third Reading read.

Brian Wilson: I beg to move, That the Bill be now read the Third time.
	I thank Members on both sides of the House for another lively and interesting set of debates. What with our recent Second Reading debate and today's proceedings, we have given the Bill's key principles a thorough airing. There was a slight frisson of excitement on the Opposition Benches as we concluded our previous debate, and perhaps I should clarify the point of order raised by the hon. Member for Reigate (Mr. Blunt). I was referring in particular to clause 3, which, as I said, is generic. The hon. Gentleman's misunderstanding might stem from the fact that although clause 1 relates exclusively to British Energy, the rest of the Bill is not framed so specifically. I hope that that provides him with the explanation that he seeks.
	Last week, we had a good debate about the broader principles that underpin our support for British Energy, and perhaps to a lesser extent about the Bill itself. We moved into the realms of wider energy policy, and I can assure the House that there will be a further opportunity to discuss the wider issues in the context of the energy White Paper when it is published according to the time scale that I have already defined.
	Hon. Members are now aware that this is a small Bill, and as I have said, it does not stem from any ideological wish to renationalise, or from any particular political direction. It is a pragmatic response to a particular set of circumstances that are not of our making. It will ensure that the Government are well placed to deal with any eventuality in relation to British Energy, whether the solvent restructuring deal announced on 28 November ultimately succeeds or fails.
	As I said, the current situation is not of our making. Last week, we had some discussion of the contributory factors to British Energy's difficulties, but the reality is that we are dealing with a company with serious problems. It had to face up to the need for restructuring, and, as I have always acknowledged, it encountered some very difficult market conditions. Equally, it made some serious mistakes, leading to the crisis that came to the fore in November.

Crispin Blunt: Does the Minister accept any responsibility for the Government's contribution to British Energy's difficulties?

Brian Wilson: I do not think so, at least not in those terms. I suppose that, if one draws things widely enough, everything contributes to the various circumstances in the sector, but I should point out that British Energy specifically welcomed the changes in the electricity market when they were introduced. It is clear that, if it had taken certain steps, or avoided the steps that it did take, it would have been much better placed to deal with the conditions that arose.
	I have always made it clear that I am not in the business of recriminations. I have known the company for a very long time, including in its pre-privatisation guises. One thing that we have agreed on throughout these debates is that no fault should be attributed to the people who work in the power stations. They are the somewhat uncertain victims of this situation, and I have no wish to go back into history and point the finger. We are where we are. We have a nuclear power company that contributes very substantially to our energy needs, and anyone else who was standing in my place would have had to respond in a roughly similar way to ensure the meeting of two key criteria: security of supply, and the entirely safe operation of nuclear power stations.

Andrew Lansley: I am grateful to the Minister for giving way, and for responding substantively to points that I raised on Second Reading, but I would like to return to one of them. He rightly said that the Government are proposing a mechanism for sharing revenues whereby 65 per cent. of available cash will go into the nuclear liabilities fund. However, let me put the point to him again, if I did not explain it well enough.
	I was suggesting that the increase in free cash, as it were, might originate from one of two sources. It could come from a reduction in costs on the part of British Energy—the hon. Member for Twickenham (Dr. Cable) talked about that—which should be rewarded and incentivised, or from increases in price in the market place, which might give rise to substantial additional cash for British Energy. Does the Minister think that the proportion of 65 per cent. overall may not be quite right, and that it should be lower if it relates to reductions in costs passing through to British Energy's shareholders, or higher if it is simply the result of increases in prices in the marketplace?

Brian Wilson: No, I think that the balance is about right. I understand the hon. Gentleman's point and I can see that there is an argument for a more complex arrangement, but there is a great deal in the restructuring package that incentivises good performance and a reduction in costs. Taking a single figure of 65 per cent. will not militate against that, and, if it is achieved through an increase in the price of electricity, and therefore the greater profitability of the company, it is a reasonable proportion. I have written to him about the matter, and I am prepared to continue the debate, but not in the context of the Bill.
	I repeat that no matter who was standing here now, they would have to take steps to deal with a set of circumstances that nobody wants and that came upon us over a period of months last year. If I was in the recriminatory stakes, I would have said a lot more about the role of the previous Government—I have been very gentle and alluded to it only in passing. If that had never happened, we would not be in this position tonight, but let us not delve too deeply into history.
	This is a pragmatic Bill that responds to a specific set of circumstances. It gives us the flexibility that we need to respond to all eventualities. There is no renationalisation agenda, but equally, in the absence of any obvious suitors from the private sector, that is a possibility that we cannot rule out. Although I fully respect the right and duty of Opposition Members to probe and examine our proposals, ultimately we have a lot more in common, as it is recognised that no responsible Government could walk away from such circumstances. In that spirit, I ask the House to support the Bill.

Crispin Blunt: I can follow the Minister as far as thanking hon. Members for their contributions to the proceedings on Second Reading and today, but I fear that that is about it. I thank the forces of darkness—Greenpeace and Friends of the Earth—for their advice and assistance. When they are lined up with the forces of conservatism, we have an interesting alliance ranged against the Government. I should also commiserate with the Minister. I think that for him this is a particularly sad piece of legislation because of what it will mean for the future of nuclear generation if it is allowed to go through in its current guise.
	It is a dreadful little Bill. We, as a House of Commons, have just resisted the principle of any limit on expenditure by the Executive. It is an astonishing state of affairs that the House of Commons can so fail to discharge its obligations to the people who put us here. In Committee, the hon. Member for Bury, North (Mr. Chaytor) said that the situation was ambiguous in that people on either side of the argument could be on either side of the Bill.

Stephen Ladyman: I thought that we established earlier today that European law means that any expenditure by the Government has to be the minimum possible to carry out the restructuring, so we have not abrogated our responsibilities as the hon. Gentleman suggests.

Crispin Blunt: I assure the hon. Gentleman that the proposed reconstruction of British Energy will be more expensive than putting the company into administration, which is what should happen.

Brian Wilson: I want to probe the hon. Gentleman a little more on this matter. I made it clear that the possibility of raising or even abolishing the spending limit was only a cover against an extreme set of circumstances. No one wants or expects such circumstances to come about. Will the hon. Gentleman say what the Opposition view is about what should happen if the company failed catastrophically? Its liabilities would still have to be met. Would the Opposition set a limit on the amount of money that could be spent on dealing with the liabilities of the nuclear industry, in the absence of the company that previously had responsibility for them?

Crispin Blunt: The answer is obvious. The company would go into administration, after which an assessment would be made of which liabilities it would be appropriate for the Government to take on, and which could be recovered from a sale of company assets by the administrator. As the Minister made clear in Committee, any immediate charges that fell to the taxpayer would come under the short-term provisions of the appropriations legislation. Any responsible Executive would come to Parliament to seek authority for the expenditure incurred.
	In contrast, this Government have come to Parliament to demand an unlimited amount of money, to be spent in an unlimited number of ways. The Bill has been subject to a limited amount of scrutiny. The Minister said that the Bill had been given a thorough airing, but I disagree: clause 2 has not been looked at in detail, because we wanted to put a limit on Government expenditure. The House has not considered the issues involved properly at all, and there has been no explanation as to why the programme motion did not allow proper exploration of the serious contingent liabilities on the taxpayer that will flow from the Bill if something is not done about it in another place.
	It is dreadful that no hon. Member, of any party, who is not a member of the Executive has been able to discharge the duty to protect the interests of the taxpayer. That is a pretty sad reflection of what passes for parliamentary scrutiny.
	If the Bill is given a Third Reading, the Government will have secured the ability to spend an unlimited amount of taxpayer's money on this exercise. I want to make a formal appeal from the Dispatch Box, on behalf of Her Majesty's Opposition, to the Chairman of the Select Committee on Trade and Industry, the hon. Member for Ochil (Mr. O'Neill). I hope that he and his Committee continue to supervise the affairs of British Energy, and to monitor the way in which the Government go about the company's rescue. Also, I want to go on record with a request to the Chairman of the Select Committee on Public Accounts, my hon. Friend the Member for Gainsborough (Mr. Leigh). I hope that he and his Committee, with the assistance of the National Audit Office, will investigate all the expenditure associated with this affair.

David Drew: I thank the hon. Gentleman for giving way, and I hear what he is saying about the financial probity of the arrangement, which should be combed over very carefully. However, the much more important issue is the basis of the nuclear industry. Would not it be possible, if British Energy were put into administration, that its assets could be carved up and sold off? If so, they would be sold only to certain players. Would the hon. Gentleman be happy if those players came from Russia, Ukraine—or even from North Korea? Those countries are home to the key players in nuclear energy around the world.

Crispin Blunt: Before I respond, may I congratulate the hon. Gentleman on his proposal to form a parliamentary group on nuclear energy? That would give us another forum in which to discuss these matters. However, I hope that the group will not detain itself too long on any possible North Korean purchase of British Energy assets. It is a little unlikely that a North Korean purchaser would get the appropriate licence to administer the plants involved. It might be an extreme possibility, but I am sure that we can trust the appropriate authorities to ensure that the eventuality suggested by the hon. Gentleman does not take place. If people want to purchase the assets out of administration, they must pass the tests necessary to establish their suitability to operate nuclear plants.
	The Minister was understandably defensive when I intervened to ask if there was any suggestion that the Government might have contributed to the difficulties of British Energy. We all know that they have done so; the climate change levy is the main example. I hope that at some point the Government will own up and admit formally that the new Labour name "climate change levy" is utterly misleading, that it is in fact an energy tax and that they will change its name accordingly. It is time that they were honest with industry, the public and Parliament; if it were really a climate change levy, it would not be paid on nuclear-generated electricity.

Stephen Ladyman: I am grateful to the hon. Gentleman for giving way again, but he cannot have it both ways. He cannot argue that the Government are at fault for distorting the marketplace while saying that the market should sort things out and the company should go into administration. That is completely illogical.

Crispin Blunt: It is not illogical. I am not saying that the Government are entirely responsible; I made it clear during my Second Reading speech that the main responsibility lies with the commercial strategy pursued by British Energy in a difficult market. I also made it clear that we welcomed that market, which has brought substantial benefits to consumers of power in the UK—be they industrial or domestic.
	The Government have contributed to British Energy's difficulties, however. The outcome may have been different if they had not introduced the business rate regime, which they imposed by statutory instrument, or if their negotiations with BNFL—a Government-owned company—had been otherwise. Those arrangements have undoubtedly contributed to the difficulties experienced by British Energy, although as I said, the major factor was the failure of the commercial strategy pursued by the company. When private sector companies cannot cope in a difficult market, they go bust and end up in administration.
	Whose interests are served by the Bill? The British Energy rescue effort is certainly not in the interests of the taxpayer, although it will enable the bondholders and shareholders to emerge with some value. Ironically, as British Energy will continue to exist, Robin Jeffrey, who has been pilloried by the Secretary of State for Trade and Industry, will get what is due to him under the terms of his contract. That would not be the case if the company went into administration.
	Does our future electricity industry benefit from the Bill? The measure will result in an appalling degree of Government intervention in the electricity market, which will raise the internal rate of return demanded by future investors in private sector electricity generation. That will result in more expensive electricity for industry and for consumers. Not only will the industry lose, but so, too, will every citizen of the United Kingdom. Other producers will lose from the Government's intervention. If the company ends up in the public sector, we shall all lose because the electricity generating industry will be less efficient.
	This is an especially sad occasion for the Minister. He has considerable constituency interests in the success of British Energy and in the future success of nuclear generation in the UK. If the Bill is passed, it will sound the death knell for the long-term future of the industry in his constituency and the UK and that is something that we may come to regret.

Martin O'Neill: It is unfortunate that the Government have to introduce this legislation and that the company did not anticipate some of the difficulties that it encountered. There were also elements of bad luck but my hon. Friend the Minister pointed out that at the time of ending the pool, no warning was given by British Energy. Indeed, it did not participate in the debate about the pool at the time it was altered.
	On occasions, British Energy was irresponsibly generous to its shareholders and insufficient provision was made. When the company did have a large amount of money, it probably did not adopt commercially appropriate courses of action.
	We have heard the usual litany today from Opposition Members. It may be that the climate change levy made a difference—but no more than £80 million in any one year. The levy started in April 2002 and the impact on the company would not have been £80 million by September, so the period in which the CCL may have had an impact was relatively short. As to rates, neither are they that significant.
	I was surprised that the hon. Member for Reigate (Mr. Blunt) did not refer to the windfall profits tax. If anything hit British utilities, it was that tax. Conservative Members neglected to mention that when a Conservative Government had responsibility for regulation and privatisation in the 1990s, the instruction to regulators was to use a light touch and not go too hard on companies, to allow them to make phenomenal profits.
	One of the great surprises for a Labour Government has been the lack of opposition from those who paid the windfall tax to that tax. The opposition was such that Conservative Members did not pick up on it when trying to throw something at the Government today. British Energy shareholders lived a charmed life until September and if the financial rescue goes through, they may enjoy a small degree of comfort in future.

Crispin Blunt: I did not raise that matter because I have not been able to identify a precise windfall tax payment by British Energy. Interestingly, £2.1 billion was taken from the electricity industry—which is at least the amount that will have to go back into British Energy from the taxpayer.
	The decision by the directors of British Energy was at the margin, which is where Government intervention may have been effective. At the margin, the directors decided that the company could not trade out of its difficulties because of submissions about the future price of electricity from its own advisers. In previous years, in a different risk environment, the directors might have decided to trade on.

Martin O'Neill: If there is a different risk environment, that is not necessarily the responsibility of the Labour Government in the UK but probably more a question of the international economic situation and declining stock markets. The Government cannot be blamed. To the extent that there may be a UK dimension, it is considerably smaller than anywhere else because of the relative strength of the UK economy compared with most of our foreign competitors.
	I will not follow the example of the hon. Member for Reigate, who spoke at considerable length but had nothing substantial to say.
	The Bill is necessary so that we can sustain a nuclear industry not in perpetuity, but until the end of the lifetime of the plants. We do not know how long that will be and, although an estimate has been made, it has been extended when the quality of maintenance and of staff has suggested it could be longer than anticipated. So it is very difficult to be specific about what sums would be required.
	One of the glaring omissions from the Conservatives' case is that they have not attempted to estimate what the figure should have been if we had included a specific sum in the Bill. There was no attempt to move an amendment that would have included such a sum. The fact is that those figures are very difficult to estimate with any certainty, so such things must be open-ended.

Several hon. Members: rose—

Martin O'Neill: I shall finish soon because I am conscious of the time.
	I shall give this undertaking as the Chairman of the Select Committee on Trade and Industry: we keep a watching brief on a number of issues, and the nuclear industry is one of them because of all the concerns that we have about safety and the cost of future development. I will certainly be very anxious, so long as I am Chairman of the Committee, that Ministers and directors will be called to account for their actions because it is appropriate that we look at this issue. One of the problems with the Public Accounts Committee is that it tends to look retrospectively; we can look prospectively at how things may well end up. We will return to this issue over the years, so there will be parliamentary scrutiny in that sense. I would certainly hope that any report that we produce would be debated either in the Chamber or in Westminster Hall.
	With the appropriate safeguards of parliamentary scrutiny and given the fact that we cannot give a specific estimate of the expenditure, it is necessary to make an unspecific and open-ended arrangement. Anyone who tries to estimate the figure will get it wrong; it will be either too high or too low. However, that does not mean that we will bankrupt the country or, for that matter, prejudice electricity generation across the board.
	This year, we will start to discuss not just the White Paper, but the new British electricity trading and transmission arrangements. I hope that those new arrangements will provide, for example, opportunities to make payments for capacity and other issues of that nature, as that will go some way to mitigate some of the worst excesses of NETA, which no one could have anticipated.
	We have an opportunity with BETTA to try to improve on the shortcomings that have been so glaringly exposed by British Energy and NETA, the consequences of which no hon. Member anticipated. The Government have made a brave attempt to correct some of those shortcomings, so I welcome the Bill.

Andrew Stunell: I wish to start by thanking the Minister for the courtesy and help that he has given to those of us who have considered the Bill and for the answers that he has given to me from time to time. Nevertheless, it must be said that the Bill has been rushed and ill prepared, and we have had insufficient time to consider properly what should be done. I saw some heads shaking when I said "ill prepared", but I would draw the Minister's attention to amendment No. 19—the typography was not even right.
	The Bill is wrong in principle. It is a Bill too far, and it is too soon. Overhanging the Bill and behind all the speeches that have been made so far is the fact that we shall have the White Paper in a few weeks—perhaps in a fortnight, according to the latest hints—which will, about five years too late, set out an energy policy for this country. The fact that the Bill pre-empts significant parts of that White Paper strongly suggests that it is the wrong Bill at the wrong time.
	The Bill is not just wrong in principle, it is also wrong in detail. However, the word "detail" is somewhat misplaced because the Government can do anything that they like to anything that they want so long as the words "British Energy" are in its title or the money can be channelled through British Energy, and they can do so at any cost that they care to nominate.
	The hon. Member for South Thanet (Dr. Ladyman) keeps referring back to European Union trade restrictions. It is fine for him to do so, but the charge that the Government and the House have abdicated their responsibilities is right. It may be that Europe offers a safety net, but is that good enough? Does the House really want expenditure to be completely unconstrained except by the intervention of European Commissioners? When one has an existing limit of £2.5 billion, which is not a trivial sum, and then opposes an amendment that would lift that ceiling to £3.5 billion—and would, by extension, have opposed a ceiling of £10 billion—the situation is clearly beyond parliamentary control.
	The hon. Member for Ochil (Mr. O'Neill) said that Opposition parties had failed to come up with an estimate. He cannot have been listening because he has missed something. We have provided a ceiling, if not an estimate. The Minister has said that our ceiling does not allow him enough flexibility. His estimate is undefined, but is larger than £3.5 billion. It is utterly outrageous to make the charge that whereas the Government have a nice and precisely controlled budget, the Opposition parties have no grasp of the details. That charge flies in the face of the facts that the House has heard.

Stephen Ladyman: The hon. Gentleman can argue that the House has come to the wrong conclusion, but he cannot argue that the Bill has not been scrutinised. It has been scrutinised on the Floor of the House. Many Ministers proposing Bills, and many Opposition spokesmen opposing them, would give their right arm to have those Bills scrutinised on the Floor of the House. This Bill has had the best scrutiny possible.

Andrew Stunell: The hon. Gentleman is wrong. There has been no time to discuss ways of improving accountability and transparency. Clause 2 deals with the Government's powers to acquire securities but, as far as I can see, there is no limit on the nature and extent of the securities that the Government can purchase. A discussion on transparency would have drawn out that point. The Minister properly pointed out to the House that clause 2 is not restricted to British Energy, but relates to any assets that the Government might seek to acquire. However, that point was not discussed further. The hon. Gentleman is wrong: the fact that the Bill was discussed on the Floor of the House did not mean that it was properly and thoroughly scrutinised. The scrutiny it was given has not produced the right result.
	The only thing that clause 2 does not facilitate is the purchase by North Korea of the assets, a possibility mentioned by one hon. Member. However, clause 2 does not prevent the Government from purchasing North Korea's assets as a result of the relaxations that will be introduced.
	I want to talk about one of the unintended consequences of the Bill. I have no doubt that it was unintended, but money spent on this project will now not be available for other projects that most of us in this place would regard as more deserving. There is competition for resources—whether they are in the form of investment by the Government of taxpayers' money, or investment by the private sector of shareholders' money. There can be little doubt that the result of this particular investment will be to reduce the Government's capacity to invest in other things, and to undermine the desire of the private sector to invest in energy-related matters.
	In the past year, we have seen the virtual collapse of the combined heat and power industry for generating electricity. There has been more than a 75 per cent. drop in the amount of electricity that is generated in that way. As a direct consequence, the Government will fail to meet their carbon dioxide reduction targets. There has been no intervention from the Government on that and no support for investment. However, as a result of this project, electricity generation from the nuclear sector has been artificially sustained, and that has driven down prices further and made it harder for private investment to come in. It is even less likely that combined heat and power will become viable in this country.
	The hon. Member for Sherwood (Paddy Tipping) raised the issue of coal. The Minister swept his point aside and said that we should not consider the argument in terms of tit for tat. The Minister said that the two forms of energy should not be seen in competition. I hope that he has said to the Chancellor of the Exchequer, "I have spent £643 million on British Energy but, please, do not let that affect your view of how much I should spend on other aspects of the energy industry."

Brian Wilson: No one has spent £643 million on the nuclear industry—certainly no one in this Government. Will the hon. Gentleman tell us something positive and give us an insight into the Liberal Democrats' thinking? Faced with the situation in which British Energy found itself, what would they have done? If he is ruling out the loan facility that we granted to British Energy on the ground of security of supply and safety, how would he have met the criteria of security of supply and safety? If he cannot tell us that, everything else he is saying is so much hot air.

Andrew Stunell: Fortunately, I can answer the Minister's question. I refer him to what my hon. Friends and I said on Second Reading, in other debates and in response to the Secretary of State's statement. Indeed, I refer him to what he told us earlier. When we were in Committee, he told us that no one disputes the fact that these generating assets would continue to generate whether they were in administration or bailed out by the Government through the Bill. Let us put to rest the argument that the Bill is about security of supply or safety. They are not the issues.

Brian Wilson: The hon. Gentleman must not misrepresent my remarks. I clearly said that either option was available, but that the second option of administration would be available only on the basis of money being made available to the administrator. We would have to pay the administrator and give him the same facility that has been used for the loan. I return to my original point. Why should we suffer this nonsense when a party will not put forward any positive proposals? Is he saying that, if British Energy went into administration, the administrator should not be given access to the same money to carry out his task? Is he saying that the loan should not be given to British Energy?

Mr. Deputy Speaker: Order. That is a long intervention for this stage of our proceedings.

Andrew Stunell: Rather than answer the Minister's point again, I refer him to the speech that my hon. Friend the Member for Twickenham (Dr. Cable) made at the beginning of the Committee stage. He clearly justified the arithmetic of our case. A careful study of Hansard will give the Minister the answer that he seeks. [Interruption.]

Mr. Deputy Speaker: Order. We cannot have continual sedentary interventions.

Andrew Stunell: There we go; they do not like it. The fact of the matter is that the Bill is a mistake from beginning to end.
	I was making a point about the competition for resources, and it is unarguable that, if the money is spent on this project and is not made available elsewhere, there will be a threat to future investment by the Government and an undermining of private investment in the industry. It is hard to escape the fact that this decision falls outside any vision for a future energy policy. The nuclear industry has had a boost of several billion pounds at the expense of the rest of the energy sector.
	The Minister was at pains to say that the decision was not driven by ideology or by a preference for one technology over another. He said that it had no connection with the strategic development of UK energy policy. If that was not its purpose, what was it? I suggest to the House that it was a panic Bill; a patch-up, make-do-and-mend Bill. It is a pathetic Bill, which the House should reject now.

David Chaytor: We all accept that this was a Bill that nobody would have wished to see or experience. I have enormous sympathy with my hon. Friend the Minister for having to confront the issue, which he has done extremely skilfully.
	I must take issue, however, with one of the Minister's earlier remarks. He said that the Bill was made necessary because of recent events with British Energy. The fact is that the dubious economics of nuclear power have been widely understood for many years. They were widely understood at the time of privatisation, and voices were raised then about the consequences for the nuclear industry as a result of privatisation, and they were widely understood in the years following. The difficulty—and the main lesson that we must learn—is that, under successive Governments, there was a massive failure by the Department of Trade and Industry to read the writing on the wall. Sadly, the warning voices have come from outside Government—from the universities, independent researchers and academics—where a substantial amount of work has been done analysing the economics of British Energy, British Nuclear Fuels and the other nuclear agencies. Those voices have been ignored. Had previous Governments taken advice from those who knew the reality of the economics of the nuclear industry—and not from the DTI—we would not now find ourselves in this very difficult situation.

Martin O'Neill: Will my hon. Friend give way?

David Chaytor: With respect, there is very little time left, and I must press on.
	I want to take issue with the remark of my very good and hon. Friend the Member for South Thanet (Dr. Ladyman) that there has been adequate scrutiny of the Bill. It is a short Bill, but we have had one Second Reading debate and three hours on the Floor of the House. One could argue that never in the history of British parliamentary democracy has so much money been authorised so quickly by so few.
	My final point is that I regret that we did not reach new clause 4, which I tabled, which would have required a review of the liabilities of British Energy—whatever future shape it has—after a 12-month period and, in particular, an analysis of the relative merits of reprocessing and storage as a means of dealing with spent fuel. The fact is that the current mess is entirely due to the utter and complete lack of transparency under successive Governments, for many years, about the economics of the nuclear industry. I hope that my hon. Friend the Minister can give an absolute assurance that in the years ahead the accountancy regime for the future British Energy will be far more open and transparent than it has been previously.

Michael Weir: The main problem with the Bill is simply that it is out of context. My earlier point was that the energy White Paper is necessary to allow us to see the future direction of nuclear energy.
	We all accept that we cannot shut down nuclear stations overnight. There is no dispute about that. We do not know from the Bill, however, whether the Government foresee building new stations. Do they need British Energy to continue into the future? Alternatively, if, as the hon. Member for Ochil (Mr. O'Neill) hinted, these stations have a relatively short lifespan—30 or 40 years—what is the future of British Energy beyond that? In that circumstance, a good argument would exist for taking it into public ownership for the wind-down.
	The lack of context is the real problem with the Bill, and that is why we cannot support it. It gives a blank cheque to British Energy without establishing what is the future of the company or even how long it will be in operation. We could be throwing millions and even billions of pounds down a sink. That is not acceptable, and we will oppose the Bill.

David Drew: In the 30 seconds available to me, I should like to make one point very clearly.The reason for the need for speed was to think about the work force, whose members are eminently employable. They have to remain within the industry. Unless there is financial stability, the work force will go, and then we shall have to pick up the even bigger liability of dealing with the remaining nuclear industry, not only in this country, but in the wider world. That is why we have to act speedily. It is certainly the reason why this industry is peculiar, one that we have an obligation, as the state, to—

It being Six o'clock, Mr. Deputy Speaker put forthwith the Question already proposed from the Chair, pursuant to Orders [29 October 2002 and 27 January 2003].
	The House divided: Ayes 274, Noes 157.

Question accordingly agreed to.
	Bill read the Third time, and passed.

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Wednesday 12th February, opposition business may be proceeded with, notwithstanding paragraph (2)(c)(i) of Standing Order No. 14 (Arrangement of Public Business), for three hours or until Four o'clock, whichever is later, and proceedings shall then lapse if not previously concluded.—[Mr. Woolas.]

CRIMINAL JUSTICE BILL (PROGRAMME) (NO. 2)

Motion made, and Question put forthwith, pursuant to Orders (28 June 2001 and 29 October 2002),
	That in accordance with the Resolution of the Standing Committee of 4th February 2003, the programme order of 4th December 2002 in relation to the Criminal Justice Bill shall be amended by the substitution in paragraph (2) (time for conclusion of proceedings in Standing Committee) for the words '27th February' of the words '4th March'.—[Mr. Woolas.]
	Question agreed to.

RATE SUPPORT GRANT (MANCHESTER)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Woolas.]

Paul Goggins: Yesterday evening, I happily supported the local government grant settlement for the coming year. As the Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Shipley (Mr. Leslie) said last night, and as he will doubtless remind us tonight, overall funding has increased by 25 per cent. in real terms since 1997, and the new formula for distribution is now more fairly based on need.
	However, this evening, I wish to draw my hon. Friend's attention to an issue that seriously undermines the credibility and fairness of the settlement in Manchester—the wholly inaccurate estimates of population provided to his Department by the Office for National Statistics. That error will have serious implications for the delivery of public services in the city, not just in the coming year, but for at least the next decade. Last September, the ONS published the 2001 census results. The figures for Manchester showed a fall in population from 439,000, counted in the 1991 to census, to about 393,000—a reduction of 46,000 people, more than 10 per cent. of the population. No one in the city of Manchester believes that those figures are true. Any casual observer visiting the city during last summer's successful Commonwealth games would have noticed the extensive business and housing developments that have taken place in recent years. Those more familiar with the city centre will know that in the past 10 years an additional 10,000 people have decided to make their home there. Manchester is a city that is clearly growing, not shrinking. The conclusions reached by Len Cook and his enumerators bear no relationship to any discernible trend in the city.
	Naturally, the city's councillors and Members of Parliament wanted to examine the information on which the new census totals are based—an exercise that ought to have been straightforward, but which has turned out to be rather more challenging and complicated than any of us might have expected. Lack of resources, the Data Protection Act 1998, and the difficulty of reconciling data sources have all been given as reasons for delay. I am grateful to my hon. Friend the Financial Secretary to the Treasury, who met Manchester MPs to discuss these issues and helped us speed up the flow of information, at least from "stop" to "slow".
	As the information began to trickle in from the ONS, it soon became clear that whichever data source we looked at, the census results are deeply flawed. I know that my hon. Friend the Under-Secretary is not responsible for the census or for the way in which it was carried out, but his Department must live with the totals that it produced, so I hope that he will forgive me if I give him some examples of the discrepancies that we found. The council has shown, for example, that about 10,000 properties in the city, for which the council receives council tax, were neither identified nor canvassed by census enumerators. As my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) explained in an earlier debate, Mancunians are honest and generous, but they do not pay council tax on behalf of imaginary people.
	In Manchester we discovered that there are more people in receipt of pensions, more children in receipt of child benefit and more children attending schools than were counted in the census. The census also identified fewer live babies under the age of one than were born in the city during the relevant period. Clearly, Caesar Augustus 2,000 years ago had a more efficient system of enumeration. In 2001 the city's electoral register showed a total of 310,000. Given all the problems associated with registration, with which hon. Members are familiar, particularly in our major cities, most people would probably regard that as being on the low side, but not as low as the census estimate for the number of people aged 17 and above, which is 305,000—some 5,000 fewer people than appear on the electoral register.
	The explanations offered by the Office for National Statistics range from complacency to sheer fantasy. The ONS has argued that it is the overestimation in the previous census that is to blame. When discrepancies are discovered, they are passed over if similar discrepancies have occurred in other places. In other words, because the ONS got it wrong in other places as well as Manchester, that should be regarded as corroboration of its results.
	Most unconvincing of all is the speculation by the ONS that prior to the 2001 census, there had been an underestimate of the number of young men who emigrate from this country each year. Without substantiating its figures or cross-checking with alternative data sources, such as the international passenger survey, the ONS claims that young men have been leaving at the rate of 50,000 a year. I have not particularly noticed a reduction in the number of young men on our streets, but even if the figure is true, as my hon. Friend the Member for Manchester, Central (Mr. Lloyd) pointed out in our debate in Westminster Hall, they presumably do not all come from Manchester.
	Whatever view one might eventually take of the efficiency of the ONS, it is clear that full public scrutiny of the census has hardly even started. In relation to Manchester, the ONS has agreed to the suggestion by the city council that Manchester Geomatics based at Manchester university should be asked to help in the property-matching exercise, but that will still take months to complete. Likewise, even though many of the alternative administrative data sources have been made available, the council is still waiting for explanations and clarifications about how the data were applied. At least one source of data, the postcode sample, has still not been made available.
	I listened carefully yesterday and I heard my hon. Friend the Under-Secretary say that the ONS is confident about the information that it has presented. I and other hon. Members would be interested to know whether Ministers in the Office of the Deputy Prime Minister share that confidence. The letter sent on Tuesday this week by the statistical officer at the Office of the Deputy Prime Minister is not very encouraging. She confirmed that, for the purpose of grant distribution in 2003–04, the population data for Manchester would be based on the 2001 census. She went on to justify that course of action by pointing out:
	"all results for each local authority were the subject of intensive quality assurance which included a comparison with aggregate administrative data such as patient registers, child benefit, school census and pensions data".
	I simply do not understand how that statement can be defended in relation to Manchester, given the clear discrepancies that exist in each and every one of those categories.
	In Westminster Hall on 15 January, in a debate that was very ably led by my right hon. Friend the Member for Manchester, Withington (Mr. Bradley), the Financial Secretary asked us not to hold her responsible for the way in which the census results are used by the Office of the Deputy Prime Minister. I sincerely hope that my hon. Friend the Under-Secretary will not try to use that same argument in reverse by claiming that he cannot be held answerable for the accuracy of the census. If his officials are defending the accuracy of the census, I hope that he will tell us what steps Ministers in his Department have taken to satisfy themselves that the figures are robust.
	As Tuesday's letter and yesterday's debate made clear, any concerns that may exist have not prevented Ministers from using the results as key inputs to the 2003–04 revenue support grant settlement. In the case of Manchester, using the 2001 census results will mean that there is a loss in revenue support grant of £8.2 million next year. If those figures are not changed, they will apply for at least a decade, leading to the loss of even larger amounts in future. Frankly, that is a loss that the city cannot afford.
	Manchester has been very successful in recent years in securing private investment and promoting job creation. Manchester airport in my constituency now handles 19 million passengers a year. We have world-class universities, concert halls and football stadiums. All those things are restoring Manchester to its rightful position as one of the foremost regional centres in the country. Yet we still face enormous challenges. The Office of the Deputy Prime Minister's own index of deprivation indicates that Benchill in my constituency is the most deprived of all 8,414 wards in England. In terms of income and employment deprivation, Manchester is the third most deprived of the 354 districts in England. We do not whinge about that—Mancunians do not parade their poverty—but we expect a fair deal, and we do not think that the 2001 census gives us one.
	In addition, Manchester is not only a city, but a regional centre. We are proud of that role and very happy to play it, but it comes with a price tag. The council rightly invests heavily in facilities such as the central library and other cultural, sporting and visitor infrastructure. Cleaning the city centre streets and providing a modern system of public transportation help to promote the economic prosperity of Manchester and the wider region, but they cost money. The loss of grant arising from the under-counting of Manchester's resident population will inevitably place even more pressure on the mainstream service spending that is vital in meeting the needs of local communities.
	I have four questions to which I hope that my hon. Friend the Under-Secretary will respond. First, will he outline what consideration was given to the representations made in a letter that the chief executive of the city council sent to the Office of the Deputy Prime Minister on 14 January? The letter set out in detail the council's concerns, together with a request that, until the agreed joint review of the data that is being undertaken by the ONS and the council is completed, Manchester's revenue support grant for 2003–04 should be based on the 2000 mid-year estimates, rather than the census. My hon. Friend has a well-deserved reputation for courtesy and promptness, but the fact that he replied on 20 January, only four working days later, confirming the Government's intention to press ahead with the census results, may leave some to reflect that the fullest consideration was not given to the views expressed by the council. An explanation of the consideration that was given would be most helpful.
	Secondly, it would be helpful to know the steps that Ministers in the Office of the Deputy Prime Minister took to satisfy themselves that the census results were accurate. It is incredible that a Department would give £51 billion without being satisfied that the data that governed its distribution were robust. It would be interesting to know why the Office of the Deputy Prime Minister felt it necessary to use the census data so soon after their publication and before external scrutiny had been possible. If Ministers had taken longer to implement the new data, it would have allowed time for resolving disputes. It would also have made it possible to incorporate more refined data, for example, about ethnicity, which have not been included for the forthcoming year.
	Thirdly, I wonder whether my hon. Friend the Under-Secretary will go a little further than he went in yesterday's debate about the action that the Department intends to take if the work of the Office for National Statistics and the city council leads to changes in the census results. Last night, he said that Ministers would
	"have to look carefully at their . . . impact."—[Official Report, 5 February 2003; Vol. 399, c. 401.]
	Perhaps he will take the opportunity to offer greater reassurance and confirm that if the census data are subsequently revised, the city's grant entitlement will be fully restored. Such an assurance may not yield immediate money, but it would give the council greater confidence as it sets out its spending plans for the year ahead.
	Fourthly, can I tempt my hon. Friend, even at such a late stage, to offer Manchester a short-term solution to the shortfall in grant, which arose from the 2001 census, at least until the data-matching between the ONS and the council is completed? For 2003–04, would my hon. Friend consider making an additional allocation to the city, for example, of £8 million from the neighbourhood renewal fund? The overall grant settlement would not be affected, and the city would not be denied vital resources.
	The census is not an academic exercise. It becomes the means whereby resources are distributed and vital services are funded. Common sense and detailed analysis tell us that Manchester's population has not fallen by 10 per cent. in the past decade. The city and its people should not be penalised for errors in the way in which they were counted. 6.27 pm

Christopher Leslie: I congratulate my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) on securing this debate on the effect of population on the local government finance settlement. It is of interest not only to Trafford and Manchester, the authorities in his constituency, but to those who are worried about the impact of census calculations and results on the revenue support grant for their authorities.
	Hon. Members debated the matter at length yesterday when the final financial settlements were approved. Many hon. Members and local authorities, including Trafford and Manchester, have made representations on the settlement. I note that my hon. Friend signed a letter on the issue from Manchester Members. My hon. Friend the Member for Manchester, Blackley (Mr. Stringer) has been especially keen to press the issue. Although he cannot be present, it would be wrong to pass over his anxieties.
	My right hon. Friend the Minister for Local Government and the Regions was happy to meet a delegation from concerned authorities, including representatives from Manchester. I appreciate that my hon. Friend the Member for Wythenshawe and Sale, East spoke passionately about population estimates for Manchester in the recent debate that my right hon. Friend the Member for Manchester, Withington (Mr. Bradley) initiated. The Financial Secretary responded as the Minister responsible for the ONS.
	We considered all representations carefully before making our decisions. Indeed, one of my hon. Friend's four questions was about that. I recall the letter that he mentioned and I considered its contents. All representations that were made in time were considered carefully. I shall elaborate on the point later, but we must rely on some information on which to base our population statistics. We concluded that the ONS was the best source and the representations did not persuade us otherwise.

Keith Bradley: The Minister has confirmed that the Government rely on the information provided through the census by the ONS. If, after the exercise that is being belatedly undertaken—especially on property data and the sample matching exercise—those figures prove to be erroneous, can he confirm that the Government will adjust the basis on which the financial settlement is calculated and restore to Manchester the money that it is due this year? If that does not happen, the problem will be perpetuated for many years to come and Manchester will lose grant for year after year.

Christopher Leslie: My understanding of the rules is that we have one opportunity to make an amending report should it become obvious that mistakes have been made in the data used in the financial settlement for local authorities. As I said in the debate yesterday, if the ONS tells us that it was wrong in its conclusions and in those figures, we would have to think carefully about making those adjustments. However, it would be difficult to anticipate those circumstances arising, not least because the ONS has not so far given us cause to doubt its statistics. In the meantime, we have to rely on the information that we receive from it. I have been keen to pass on to the ONS all the representations that have been received from hon. Members and local authorities, when those representations have been made in detail.
	My hon. Friends will be aware by now that the area will receive increases in the formula grant above the national average of 6.3 per cent. for Trafford and 6.5 per cent. for Manchester. Those are good settlements for the authorities in my hon. Friends' constituencies and they might wish to compare them with those allocated to other metropolitan districts. It is true that Manchester will receive a lower increase than some other metropolitan areas—which is mainly due, as my hon. Friend the Member for Wythenshawe and Sale, East pointed out—to the lower population estimate, but that should not detract from what is a very good increase. It is more than twice the rate of inflation in a single year, and it should not be overlooked that that is a good settlement.

Tony Lloyd: The national settlement is good, but the credibility of the process depends on people accepting that the statistical basis that underpins it is accurate. If that accuracy can genuinely be questioned, that brings into doubt the whole process by which the Government determine the needs of an area such as Manchester. Even given the good settlement, we believe that our population has been underestimated and that therefore, as my hon. Friends have said, we will live with the result for many years. Will the Minister confirm that he will not get locked into a battle to defend the ONS when what he should be defending is the probity of the process of allocating moneys to local authorities such as Manchester?

Christopher Leslie: I know that my hon. Friend is aware of the position of the Office of the Deputy Prime Minister. We have to draw on several different data sources and must place a certain degree of confidence in the people who provide that data. It is true that it is important to have valid statistics. It is also crucial to have faith in the veracity of the information that we receive if people are to accept that the final conclusions are fair and equitable. As I shall explain in a minute, I believe that that is the case in this instance. I have had discussions with my hon. Friend the Financial Secretary on those matters and she accounted for the ONS—a non-departmental public body—when she spoke in the recent debate in Westminster Hall.
	Trafford's position is more complex than Manchester's, which will gain less relative to other metropolitan authorities, as much because of its higher ability to raise tax locally—known in the jargon as resource equalisation—and declines in pupil numbers, as because of population loss. The increases since the provisional settlement, which I am sure that my right hon. and hon. Friends will welcome, reflect the use of more up-to-date tax base information than was available for the provisional settlement, and corrections to the area cost adjustment data.
	On the area cost adjustment, I am sure that my right hon. and hon. Friends will recognise that high-wage areas exist outside London and the south-east. It was precisely for that reason that we made a change to the way in which area cost adjustment applies to the rest of the country. Now, all Greater Manchester authorities, including both the authorities that my hon. Friend the Member for Wythenshawe and Sale, East represents, get an area cost adjustment factor, bringing increased resources to those local authorities. I know that that will be welcomed.
	On the specific issues raised today, our position is clear. We need to use the best, most up-to-date information available to us on a consistent basis for all authorities. For population, we have to rely on the advice of the ONS—the registrar general's office—a body accountable to the Treasury. The ONS tells us that it is confident that the approach adopted for the 2001 census provides the most accurate estimates of the population both nationally and for each of the 376 local authorities in England and Wales. It is difficult for me to comment in precise detail about some of the methodological criticisms of the estimates. I know, however, that the ONS asserts good reasons why alternative sources raised by Manchester and others differ from the usually resident population estimates that the ONS produces. I know that my hon. Friend the Financial Secretary was robust in her defence of these detailed points in the recent debate.
	The 2001 census results have generated huge interest in the census methodology and in the numbers themselves. The ONS has been responding to the official representations that have been received from local authorities in England and Wales openly and transparently. This has included exchanges of official correspondence, meetings with the national statisticians and the Financial Secretary, and the provision of additional data when appropriate. I am assured that this communication has been carried out under the code of practice within which the ONS operates.
	A number of local authorities have visited the ONS for a more in-depth demonstration of the census process and quality assurance, and to discuss further the issues that they have raised. To date, six local authorities—including Manchester—and a number of representatives from other Government Departments have visited the ONS. A large quantity of information has been made available on the national statistics website to provide census users with as much information as possible about the 2001 census results, and I am told that more information will be made available at the end of February.
	The ONS does not currently plan to revise its population estimates. However, if it does revise its figures, we will have to look at that position at the time and consider the situation carefully. If appropriate, we will be prepared to issue an amending report. I am confident that such a report could look at enacting retrospective changes, if that were the judgment that we came to make. As for the future, we intend to continue to use the registrar general's estimates. These are the best available at the time. If revisions are incorporated into future mid-year population estimates in time for the appropriate settlement, we will of course use the revised estimates.
	My hon. Friend the Member for Wythenshawe and Sale, East asked whether we could give additional support, either in the form of neighbourhood renewal funds or in some other way, to help to counteract what he claims is the deficiency in the population estimate. I am afraid that I cannot hold out a massive amount of hope for that prospect. We have to assess the support that we give through the neighbourhood renewal fund equitably across the country.
	I am also clear that the floors and ceilings mechanism provides all the damping that is required, in terms of support for authorities that suffer from severe data changes. Authorities that benefit from reasonably good settlements such as those received by Manchester and Trafford do not need any damping this year. Indeed, we were subject to considerable pressure from other authorities to remove the protection that "floor" authorities receive against population losses. It was argued that certain authorities had benefited for too long from past overestimates of population. We used the best information that was available at the time, and we have always included all data changes in the protection afforded by the floor. I do not think that it would be fair to change the rules simply because, with the benefit of hindsight, we found that data were inaccurate. Nevertheless, as I told my hon. Friend earlier, if the ONS informs us that an error has occurred we will of course take that seriously.
	I hope that I have dealt with most of the problems raised by my hon. Friend. I know that there is a lot of concern about the issue, and I have not failed to observe the detailed representations that have been made and the attention that has been paid to methodological issues. Much effort has been put into Members' arguments in support of their constituency interests when they have spoken to Ministers. If I cannot change the decision, at least I can pay tribute to the thorough way in which Members have aired the issue and drawn attention to their constituents' needs. While we must take account of our best data source, the ONS, it is clear to me that the ONS will need to engage in an exercise of explanation and dialogue with all who want to raise their particular cases. This is a very important—
	The motion having been made after Six o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at eighteen minutes to Seven o'clock.